Today, we're going to discuss what happens if you get a bad appraisal. I'll go over what you can do to prevent it, and what to do when it happens.
First of all, you want to hire an agent who is familiar with the area and knows property values in that area so that you don't price the house wrong at the start. You want to make sure that you have comparable sales that support your listing price.
On our team, we put together an appraisal package for you that includes comparable sales, a list of all the upgrades you've made to the home, and information we gleaned from showings of the property. That way, we have a lot of supporting information to show the appraiser.
Now, what happens if the appraisal comes in low? As a buyer, you are required to give the seller a copy of the appraisal. If it appraises higher than what you're paying, you don't need to let the seller know. For low appraisals, you will also send the seller an amendment to reduce the price.
Usually, the buyer will request to bring the price down to the appraised price. Oftentimes the buyer and seller can negotiate the price. For example, let's say the house is under contract for $200,000 and appraises for $190,000. The buyer and seller can agree to meet in the middle at $195,000, and the buyer would come to closing with an additional $5,000.
Sometimes though, the buyer doesn't have extra money for closing, and the seller may be forced to reduce the price if they need the home to sell. That's why it's important to start with an experienced, skilled agent who knows about appraisals and can negotiate well.