Have you had your house appraised, whether you are buying, selling, or refinancing, and it appraised at a lot lower than you expected? That is very unfortunate if it happens. But this is okay! You do have some options, no matter what boat you are in. The appraised value of your home is very important as it affects quite a few things – and what it affects does depend on the type of loan you have. The loan-to-value ratio dictates how much the lender will finance. This ratio must stay within certain limits.
There are a few options as a buyer, if the the home you want appraises for less than what you are going to purchase it for. To start, you can renegotiate the price of the home. This is something that should be looked at from the start as it is only fair! You also have the option to cancel the contract if both the buyer and the seller cannot come up with some sort of agreement. Most contracts have an appraisal contingency in the off chance this type of situation happens. As a buyer, you want to make sure you have an appraisal contingency in your contract as it definitely has the ability to help you.
If you are the seller, you have a few options if your home appraises less than expected. To start, you may want to lower the price you are asking for. Potential buyers will not want to purchase a home for more than it is worth. You also have the ability to order another appraisal. But you do risk not getting the answer you are looking for. Since we are currently in a buyer’s market due to inventory being low, you do have that on your side!
One of the great things about this potentially happening is that you do have options! You are not stuck buying or selling the home if it appraises at lower than anticipated.