You found your dream home and have just received the appraisal back for 10, no 20% below the price your offered just accepted by the Seller…what now? Don’t panic, you are not the only buyer this has happened to. In fact, last June and July 16% of real estate sales were reported as cancellation due to low appraisals. This doesn’t mean your only option is to walk away, here are five alternative options for you to consider:
Have the seller lower their asking price!
- Sounds easy enough right? In many cases sellers are in a hard spot in this economy and are ready to sell so may be more willing to lower their asking price than you may think, especially if they know the appraisal came back at 10% or more below the accepted offer or they need to sell to purchase their new home. Some buyers are even offering incentives such as paying for the sellers closing costs, in turn making it less expensive process for them.
- The second mortgage wouldn’t cost the seller a thing but would of course give the buyer more debt. If a buyer cannot come up with the cash needed to close the deal payments or a lump sum at a later (set) date to the seller. Once escrow has closes the second mortgage can often be discounted and sold for less to an investor.
- While this may seem a bit intimidating you could be the potential “victim” to an unfair appraisal. By disputing you can ensure the contract price is accurate and aligned with the CMA (comparable market analysis) prepared and provided per your agent, research who actually completed the appraisal and what their reputation is. Have their been complaints filed on the company whom preformed the appraisal? Was their adequate information provided to the appraiser about the property before a decision was made? Etc.
- If you find the appraiser is located out-of-town, you have more pull due to the face he would be less familiar with the property market.
- If you choose to dispute ensure you have loads of information. Compile every piece of information available to you, this could mean a win or lose for your appraisal.
- Simply ask your lender for a new appraisal if you feel yours was completed inadequately. This may mean an extra charge to you but it may be worth it for as chance at your dream home. You may want to talk with your agent about the seller possibly splitting the cost with you. The listing agent and sellers agent may even be willing to split the cost so to not give either client more costs. Additional appraisals are around $400.
- This is one of the more risky options as it could mean another appraisal coming back with the same conclusion or worse, coming back with an even higher appraisal than the first.
- The choice to allow another appraisal per your lender is up to him. You will need a very convincing argument but the chances of an override are low.
- You can choose to obtain your own appraisal by asking your lender for a list of appraisers. There are a couple of different ways this could turn out. The bank will review your submitted appraisal and turn the original appraiser for their opinion to see if they agree with the new appraisal.
- If the original appraiser agrees with the newly submitted appraisal they can adjust the original appraisal giving you your new price.
- If they do not agree with your newly obtained appraisal, the bank may request a third appraisal or just simply deny your appraisal.
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