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What happens to my house sale if the bank appraisal comes in low?

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Wheatland Realty Agent Nicole Tudisco discusses the three options you face when your home appraises for less than the agreed purchase price.

Negotiating the sale price of your home and coming to terms is not the final hurdle in a real estate transaction.  No matter what you and the buyer agreed to regarding the sales price of the home, the appraiser must also agree or the bank won’t lend the buyer the money.  If the bank doesn’t lend the money obviously the deal is dead.   The only time an appraisal is not required is if the buyer is paying cash. Otherwise every lending institution is going to require an appraisal to ensure the investment they are about to make is a good one.   

So what happens in a worst case scenario when the appraiser determines that the home is worth less than the agreed sales price? Well, there are 3 options:

1.)  Seller can reduce the price to meet the appraised price

2.)  Buyer can bring the difference between the appraised value and agreed value in cash to the closing table.

3.)  Get another appraisal 

Which of the above 3 is the most plausible?

The first option is the most plausible.  If not the deal falls apart and the home will go back on the market.  The seller will have to look for a new buyer in hopes a different bank appraises the home higher.  Take a careful look at your market sales and conditions before you let that happen.

When it comes to choices 2 and 3 what are the chances the buyer is going to agree to get a 2nd appraisal so they can potentially pay more for the home? In their mind they will be viewing it as over-paying for the home.  Only one time in 10 years we had a buyer bring the difference in cash to close.  It’s rare!  In reality, if the home does not appraise, the seller meets the appraised value or the deal falls. 

The moral of the story is your home is only worth current market value no matter what you can get a buyer to pay!

Questions? Contact us , we are happy to help with all your real estate needs!

Have a safe and happy 4th of July!

Nicole & Tony Tudisco

www.TeamTudisco.com

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