The Moment That Feels Like the Deal Is Over and Usually Is Not

The appraisal came in ten thousand dollars below the purchase price. It is a stressful moment and one that Melanie Bundy wants buyers to understand clearly before they panic. A low appraisal is a problem that needs to be worked through. It is not automatically the end of the purchase.

The Four Paths Forward

When an appraisal comes in below the agreed purchase price there are generally several options to explore and the right one depends on the specific appraisal, the financing being used, and the terms of the purchase contract.

The first option is to ask the seller to lower the price to the appraised value. In many cases sellers are motivated enough to close that meeting the appraised value is preferable to losing the deal and starting over with a new buyer who will likely face the same appraisal outcome on the same property.

The second option is to meet somewhere in the middle. The seller reduces the price by some amount and the buyer covers the remaining gap. Neither party absorbs the full ten thousand dollar difference and both sides compromise to keep the transaction moving forward.

The third option is to keep the agreed purchase price. Depending on the loan type this may mean bringing additional cash to closing to cover the difference between the appraised value and the purchase price. Before any decision is made the actual dollar amount gets calculated so the buyer can make an informed choice rather than reacting to a number before understanding what it actually means for their closing costs.

The fourth option is one that not enough buyers know about. Review the appraisal itself. Appraisals are completed by human beings working with the information available to them at the time. If the appraisal contains an error or if it overlooked relevant comparable sales that would support a higher value a reconsideration of value can be requested. That request requires supporting information and documentation. A change in value is not guaranteed. But it is a legitimate path that deserves exploration before accepting the low value as final.

Why the Right Next Step Is Not the Same for Every Situation

The appraisal itself matters. What it says, how it arrived at the value, and whether there are identifiable errors or omissions determines whether a reconsideration of value is worth pursuing. The financing being used matters because different loan programs handle appraisal gaps differently. The terms of the contract matter because they define what each party has agreed to and what options are available within those terms.

Melanie Bundy's job is to help buyers understand the numbers clearly and talk through the options with their agent before any decision is made. A low appraisal is a negotiation point, not a verdict.

Have questions about an appraisal situation? Send them Melanie Bundy's way.

Sources

ConsumerFinancialProtectionBureau.gov
FannieMae.com
MortgageNewsDaily.com
Investopedia.com
HUD.gov