Appraisal Issue....Now what

Oh Happy Day…..You got a house under contract.  Whether you’re a buyer, seller or a Realtor, everyone’s having a good day when you get a house under contract.  So you know you’re going through the process, everything is going well, no issues with the inspections and oops…. You hit a snafu.  There’s an issue with the appraisal.  The appraisal didn’t come in at contracted price.  Seller could be obviously upset about this wondering “Why didn’t my house come in at appraised value? My house is a castle.  This is a beautiful home.  What’s the problem?” You know buyers could potentially be a little excited about the possibility of getting the house for less money or they could also be concerned about why the value came in at a lower price than the contracted price.

The agents need to work it out with both parties and try and keep this deal together.  And here’s what can happen.  One thing that can happen is one of the agents, usually the listing agent, can challenge the appraisal.  They need to provide three comparable sales that support the price of the home and the lender would send that back to the appraisal management company for review and get it worked out that way.  Another thing that could happen is the seller could agree to sell it at the appraised value and the other option is to meet somewhere in the middle. This happens sometimes and sometimes unfortunately, buyers aren’t in the position to bring extra cash to make that happen.  And last but not least, the final option is cancel the contract and start all over again.  Nobody really wants that.  It’s very disappointing when a house goes out of contract and you have to start all over again; whether you’re a seller or a buyer hunting for that perfect house to secure.  It’s no fun when you have to start from scratch. 

So back to one of my previous videos, when you’re getting ready to list your house for sale, you really need to take those comparables into account when you’re sitting down with your agent.  If you’re sitting down with an agent that tells you “the highest comps are here (ex. $300,000) but  I can sell it here (say $350,000) you might want to think twice about that.  As I said before, there’s an exception to every rule.  However you’ve really got to look close and take an honest assessment of what their showing you versus what they’re saying.  Unfortunately, I hate to say it, but there are some people that just want to list your house.  They want to get their sign in your yard and they want to attract other buyers, and that could be their main concern.  Just be sure when you’re putting your house on the market, going through the comparables, you’re honestly looking at those – taking off the blinders, taking off the rose-olored glasses, and taking on honest assessment of what the value of your house is.

That’s all I’ve got for know.  Hope you’re having a great day. 

 

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