From the time you put in the offer on a house to the date you close, several months might pass. It takes time to close on a property, especially if you encounter problems along the way. One problem you might confront involves the appraisal. What happens when the home appraises for an amount less than the offer price? As the buyer, you have a few options, and here is an explanation of the various ways you can react.
Evaluate the Appraisal
The first thing you can do is evaluate the appraisal. When the appraiser completes this job, they will send an appraisal report to your bank or real estate agent. They can give the report to you, and you can read it. By reading it, you can see how they came up with the appraised value.
In most cases, appraisers get it right; the amounts they place on these reports are accurate. In some cases, though, they might have used the wrong comps or information. Hence, they might have the wrong conclusion. Evaluating it is a great way to ensure its accuracy, and you should realize that these reports are rarely incorrect. If you believe it is wrong, talk to your agent or appraiser.
Determine How to Respond
When the appraisal amount is accurate, you probably will not want to pay more than the home's real value. So, what can you do? First, you can ask the seller to reduce the home price based on the appraisal's findings. If the house is worth $15,000 less than you offered on the contract, the seller might agree to lower it. They might not lower it the full amount, but they might settle on a lower amount.
Secondly, you can agree to buy the home for this price, but you can ask the seller to include other things. If the seller does not want to lower the price, they might be willing to include other things with the deal to make up for the difference. For example, does the seller have furniture you love? If so, ask for this instead.
If you cannot reach a mutual agreement with the seller when renegotiating, you might want to back out of the deal and choose another home. Paying more than a house is worth is not a good idea, and lenders require appraisals for this reason.
If you have questions about an appraisal or need to get one, contact a local real estate appraiser today.