What to do with a low appraisal
DONOTCHANGE
You had your home appraised, but it came in low. You are now worried or even panicky, but that will not help. However, there are things that you should be aware of and things you can do to sort this out. Remember that problems uncovered are fixable.
The most important step is to understand the reasons why your home appraisal came in so low, or low at all. These can include one or all of the following:
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Many buyer offers are over-inflated
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A down real estate market has too many homes and few buyers
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No comparable sales price exists locally because of few sales or too many foreclosures
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The evaluation was incorrect
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Your price was too high
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The appraiser was inexperienced
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Sales information was not evaluated for the wrong neighbourhood
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A cash back agreement between the seller and buyer makes the lender think that the price is higher than it should be
Whatever the reason, there are things that you can do:
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Don’t panic
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Stay calm and look at the options for yourself and the other party
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If the price was inflated, the seller can lower that price
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If it is your home up for sale then you may be able to get a second mortgage to account for the loss
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Get a second appraisal by getting recommendations from your lender
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Compile lists of home sales of comparable prices in yours and similar neighbourhoods
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Use the loan contingency clause and cancel all contracts and transactions
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