How to Handle Low Appraisal Results
A lot of times, you will hear and see that people who have experienced buying a home, or real estate investors stressed on having a contingency when it comes to appraisal results. The reason behind that is because appraisal result can be a deal breaker for the buyer and the seller specifically when the result is not what the buyer have hoped for. If there’s a low appraisal result that means that the buyer will still get the loan, however, the buyer will not get the amount that he or she is asking for; the amount that the buyer will get will be lower than what the buyer asked for. Here are a few ways that you can do when faced with low appraisal result:
1. Check the other similar houses on the area – Once you received a low appraisal result, work on checking similar houses on the area and check their price range if it is the same or almost the same with the house that you want to buy. If the answer and yes, run a comparison analysis to get data and submit a request for another house appraisal. Attached your findings on the comparison analysis you have worked on your request for a second appraisal.
Second appraisal requests can also eliminate some mistakes that the first appraiser might have omitted. There might also be a chance that the first appraiser made a mistake on the report but meant to give a different appraisal result. The only thing that you also need to be reminded about second appraisal requests, is that you again need to pay for it. So just make sure you also have a budget for it.
2. Talk to the seller about the price – If checking on similar houses on the area and if your found out that the price range is not similar and the house you want to bought seemed overpriced, then talk to the seller and renegotiate the price. Show the seller the comparison analysis that you did as well as the result of the appraisal and make the seller realize that it would be hard to sell an overpriced property especially, if every appraisal result that any buyer would have is a low appraisal result.
The seller and the seller’s agent might not also be aware that they have put a wrong price on the house. It rarely happens but it still happens, and showing your comparison analysis and sharing the appraisal result might and talking to the seller might correct this mistake.
3. Look for a different lender on the same area – You also have the option to look for another lender in the area. However, you need to work on this fast because you are faced with two concerning things:
The seller will not wait for a long time for you to get another lender, each day that has passed is a day that the seller loses potential buyer that might have a better offer than you. The property is taken off of the market so no other buyers can see and make an offer to the house.
You again will need money to pay the home appraisal and if the first appraisal is still not what you have hoped for, asking for a second appraisal on the new lender, means another out of pocket expense for you.
4. Pay the difference – Instead of thinking on setting money for several appraisals, why not save money and work on being prepared to pay the difference if you really want to buy the house and not look for another property.
Tags: Appraisal Results, Property Management, Real Estate Investors