Don’t let a low home appraisal disrupt your sale. You have options.
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, you could ask your potential buyer to make up the difference. Many buyers don’t want to do this, but you have the upper hand in a seller’s market like the one we’re in now. Some may even agree to an appraisal gap guarantee, which ensures they’ll pay the difference if your appraisal is low.
Your second option is to simply lower your asking price to match the appraised value. That could entice your buyer to increase their earnest money deposit, depending on how you negotiate.
Third, you can try meeting with your buyer in the middle. Maybe your buyer will be willing to make up some of the difference in cash if you agree to lower your sales price slightly.
Finally, you can challenge the appraisal. 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.
If you’ve thought about selling your home and would like to know what yours is worth, visit my website to use our online calculator. If you have any other 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.