A low real estate appraisal can happen because of many reasons; but this should not impact the deal in any way. Well but the bitter truth is that if the house doesn’t appraise for the agreed-upon price then you have to find contingency ways. Well this situation happens more often than you might think, especially in rising markets. One reason can also be that other homes in the area do not compare to the price or may be distressed properties in the area dominate the prices.
If the appraisal is less than your offer, you might need to come up with more cash; some of the other options you should look into;
Appraisal Contingency Clause : This clause allows you the freedom to re-evaluate the situation or re-negotiate. But even with a contingency clause, you could end up spending more or walking away to look for another house. It is important to be on the same page for: sellers, buyers, and agents. Sellers might come down on price, you might pay closing costs, and agents might take less of a commission — but the deal still goes through.
Second opinion : You cannot rule out inaccuracy so it is ideal to re-evaluate the property or explaining why he or she did not use the comparable sales the lender sent. . Another option is to try working with your lender to get a second appraisal. They might be willing to accept the subsequent, higher appraisal. To help guard against a lower appraisal, make sure you let the appraiser know the reason you made the offer you did.
Appraised value : You might have found the only house you’ll ever love, but with that mindset, you’re liable to get hurt. Think again is it worth the value and in the process are you saving or losing a lot of money. Try to remove your emotions from the equation.
Market : Although some buyers pay a premium for houses in hot markets, keep in mind that yours isn’t the only stomach churning at the thought of a low appraisal. Unless cash buyers are ready to swoop in, you can use the low appraisal as an opportunity to re-negotiate.
Not all appraisals less than the offer turn out in a negative outcome. So the above mentioned steps should help you to turn the negative situation into positive deal How have you handled this situation? Share your stories in the comments below.