What if the Home Doesn’t Appraise?

How to navigate an appraisal gap in our hot real estate market.

Home prices are high right now, and that’s leading to a pretty common problem: Homes aren’t appraising. The appraisal comes in low on about 15% to 20% of the homes I sell. What happens when the appraisal is low, and how do we navigate that?

You can help solve these issues by doing a few things upfront. The first is to have your agent work with the appraiser before they even step in the house to ensure they have good comps, know all the updates, and are familiar with the area. 

Have your agent work with the appraiser upfront.

The second thing you can do beforehand is negotiate an appraisal gap. That’s when we ask the buyer to pay a certain amount over what the house appraises for if it comes in low. Let’s say the home sells for $240,000, and we negotiated a $10,000 appraisal gap. If the home only appraises for $230,000, the buyer would pay $240,000. 

Once a low appraisal comes in, you really only have a few options. The buyer can come up to meet the sales price, the seller could go down to meet the appraised price, or the two can meet in the middle. Most of the time, there’s some sort of compromise. The worst-case scenario is that we can’t come to an agreement, and the home has to go back on the market, but that rarely happens. 

If you have questions about this market, appraisals, home values, or anything else related to real estate, feel free to call or email me. I’d love to have a chat with you.