What Can I Do If My Home Doesn't Appraise For Contract Price?
When we first list a home, we review the "comps" (comparables, homes similar to yours and in the same area that have RECENTLY sold).
Before we put the FOR SALE sign in the yard we have a fairly accurate range for what your home SHOULD sell for. That said, if market conditions indicate that we're trending up in price, we're game for pushing the price envelope IF it meets your personal needs. If on the other hand speed to sell is more important than dollars gained, it's a strategy we'll discuss but probably not implement.
However, there's a risk with pushing the price ceiling up:
- Buyers and their agents may not be in tune with the trending prices OR
- Buyers and agents are okay with the price, we get an offer to reflect it BUT the appraiser has other ideas.
So what are our options if the appraisal comes in low?
1) Appeal the appraisal. Review the appraisal and look for possible errors that may have affected your home's value. Was a key feature omitted? Underreported square footage, etc. Were the comparables truly comparables? If for some reason the appraiser missed a home that helps you, we'll point that out.
If the initial appeal doesn't work, the appraisal stands. Now what? Depending on the situation another appraisal (at seller expense) could be requested.
2) The buyer asks for a reduction in contract price to match the appraisal price. If you agree, the bank is happy and the loan continues.
3) The buyer invokes the Appraisal Contingency in the contract and cancels the deal. Earnest money is returned to them and we're back on the market.
4) Buyer brings additional cash to make up the shortfall. The same effect as option 2. That keeps the loan in line with appraised value and the bank is happy.
5) A combination of 2 & 4. Seller drops the price part of the way and buyer brings additional cash. Again, bank is happy and loan proceeds.
Bottom line, a lot depends on how badly the sellers and buyers want the sale to continue AND the cash positions of both parties. If inventory is scarce, the odds of the deal staying on track go up.
If you have other questions regarding the home selling process, please contact us at 513-520-5305 or Liz@LizSpear.com.
Serving Warren County area home sellers,
Liz and Bill aka BLiz
REALTORS(S) Serving Warren County Ohio & Adjacent Areas
The Liz Spear Team of RE/MAX Elite
Elizabeth & William Spear
Ask for us by name if you visit the office!
Two locations: Lebanon & Mason, OH
Liz direct: 513-265-3004
Bill direct: 513-520-5305
Our Website: www.LizTour.com
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