Why the appraisal might not match the offer, and what that means for you. 

What happens if your home doesn’t appraise for what the buyer offered? We get asked this question nearly every time we buy or sell a home, and it makes sense. Low appraisals have been a huge factor in our market, especially with how quickly prices have been increasing. Buyers have been bidding well over the asking price, so what can you do if your home doesn’t appraise?

There are four things that can happen: the seller could come down to the appraised value, the buyer could make up the difference with cash, they could meet in the middle, or the deal could fall apart. In our experience, the buyer and seller will find a solution as long as both parties want the deal to work. 

"It all comes down to negotiating with the buyer and the seller."

With how hot the market was over the last six months, buyers would agree to make up any difference in the appraisal because they were typically bidding way over the asking price. Now that the market has shifted, we’re not seeing that as much. We rarely see any mention of it in the contract, so it comes down to negotiating after the appraisal comes in low. 

If you’re thinking about selling a home in this market, we have to talk about how we’ll handle the appraisal if we receive offers over the asking price. For buyers, keep in mind that the house can also appraise for more than you offered. In cases like these, we can ask the mortgage company to bump up the sales price and ask the seller for a credit back. That could help you handle the out-of-pocket expenses and fund some work on the house.

If you have any questions about appraisals or real estate in general, feel free to call or email us. We’d love to help.