What happens if a property doesn’t appraise for the purchase price?
So you have found the home of your dreams. You put in an offer and it has been accepted. You have completed attorney review. Now its time for inspections and the appraisal. The mortgage lender requires the appraisal in order to guarantee that in case of default they will be able to sell the property for the amount that they are lending the borrower. Essentially they want to ensure they can get their money back if things go sour.
So what happens if the appraisal is completed and the house doesn’t appraise for the loan amount? There are several options available. What both sides need to keep in mind (assuming they feel strongly about closing the deal) is that in order to resolve any issues it is important to be reasonable and work towards a solution in a positive manner. This is yet another reason to hire a good Realtor© so that as issues occur, they can be dealt with effectively and not jeopardize the deal. So what are the options?
The first option is to request a value appeal in which the appraisal company takes a second look at the house value. Perhaps there is some additional information the Realtor© can share with them. Another possibility is to ask the lender for a second appraisal in which the lender could hire another appraisal company to give a second opinion of value. A third option is for the buyer to come up with additional cash to make up the difference between the appraised value and the purchase price. Likewise, the seller might also choose to lower the price of the home to the appraised value. Finally, there could be a combination of both the buyer and seller pitching in together to make the sale work.
For more information, or if you need a referral for a knowledgeable Realtor© in your area, contact:
Coldwell Banker Residential Brokerage
211 South Street
Morristown, NJ 07960
(O) 973-267-8990 x153