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3 Options for When Your Home Appraises Low

Don’t let a low home appraisal disrupt your sale. You have options.

Your appraisal came in low on your home sale or your home purchase. Now, what do you do? Despite rising interest rates shrinking your potential pool of buyers, now is still a great time to sell your home. Home prices continue to increase, just not as quickly as they did over the last couple of years. Still, keep in mind that rising home values can also present a challenge for sellers.

Most buyers in today’s market are financing their home purchases with a mortgage. To be approved for a loan, lenders require buyers to have an appraiser come out to the property. This is the bank’s way of verifying the home’s value so that they know it is secure to lend the buyer money. In a rising market, the appraised value of your home could come in lower than your asking price. This doesn’t happen very often—around 8% of the time, according to a 2018 Fannie Mae report—but if it happens to you, what can you do?

First, confer with your real estate agent to make sure your home isn’t overpriced for the market. If it is, you’ll need to adjust your price to align with the current market conditions since most buyers won’t want to shell out thousands of dollars to cover the difference between the appraised value and the asking price. 

“Make it a win-win for you and the other party.”

If that’s not the issue, look over the comparable sales in your area. The appraiser already bases their value on comparable home sales nearby, but you might be able to find better comps to justify your asking price.

Lastly, you can negotiate with the other party. Everything’s negotiable in real estate, including how to resolve an appraisal gap. Go into it with a positive and flexible mindset to make it a win-win for you and the other party.

If you have any questions about selling your home or the market in general, don’t hesitate to give me a call or send me an email. I’d love to speak with you.

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