What Happens If My Home Doesn’t Appraise
The Louisiana purchase agreement allows the purchaser to make their offer contingent (conditioned) upon an appraisal that is equal to/greater than the purchase price. Financing is usually a contingency as well. The buyer’s mortgage company requires an approved appraiser inspect your home and determine the current value based on recent comparable sales in the area.
Recent means just that. It doesn’t matter what price your neighbor got for his house when he sold a year ago. An appraiser will be researching sales within the last 6 months and prefers sales within the last 90 days.
What can you do if your house appraises for less than the agreed upon sale price?
- Cry. Go ahead, we’ll pass you tissues and hold your hand until the moment passes.
- Yell. You are welcome to vent about the qualifications (of lack thereof) of the appraiser, but please don’t yell AT us.
- Have the buyer pay the difference between the contract price and the appraised value. If you’re in an area of increasing values and bidding wars, this may be a viable option. If it’s taking a while for homes to sell in your neighborhood, it may not.
- Cancel the sale and go back on the market. Keep in mind that the next appraiser may come up with the exact same numbers and if it’s an FHA appraisal, you’re stuck with that value for the next 6 months for any other FHA buyers.
- Reduce the sales price to the appraisal amount. This is the most common (and common sense) solution. Will doing this cause you undue financial hardship? Then it’s time to take the sign down and settle back into your home until the market catches up with you. Please remember that our crystal ball is on the fritz again, so we cannot tell you when that might be.
There is one other option when an appraisal comes in low, and that is for your REALTOR® to provide additional comparable sales for consideration by the appraiser. Occasionally, this additional information is considered and results in an adjusted value.
The best way to keep from being surprised with a low appraisal is to hire an experienced REALTOR®. An expert keeps you informed about market changes during the time your home is listed. A monthly update of neighborhood sales allows you to adjust your price as needed to remain both competitive and realistic about what homes in your neighborhood are actually selling for.
If you need more information about setting the right price for your home, please give us a call at 504-327-5303. We’d be happy to go over the real numbers with you.