C r a p .... the appraisal came back low


You're past inspection (#WOOHOO).... and think the appraisal went well, until you get the report back. And it's low.


Not a few thousand low... like major low. Like crap this may kill the deal low.





If you can act fast there may be a few options for you to save the sale - and keep everyone happy, no matter what side of the transaction you are on.


1.) Go through the comps with a fine tooth comb. Did the appraiser pick credible comps? Are there any recent solds or off market homes that sold that are more similar to your listing? If there is and those are not on the report you can absolutely argue that these be put in for consideration. 


2.) Is the appraiser familiar with the neighborhood? I've had appraisers that have come from the other side of the state before, as soon as we found out we were able to request a different appraiser and the lender reassigned the property to someone who was local and had experience within the area. This can make or break a value. 


3.) Make sure the appraiser documented your property appropriately on the report. Is your listing upgraded and in good condition? Does it say poor or not upgraded? We are all human and errors happen... its up to you to do the due diligence for your client to make sure something silly like this isn't affecting the value.


4.) If you truly feel like this is still completely wrong you can always ask for a second appraisal, sellers will typically pay for this upfront, but if it means thousands in difference for value it is well worth it.


5.) Depending on how far apart the appraisal value and contract price is, and depending on the loan type - you can negotiate with the buyer to split the difference. I will caution you though - most often times the buyer will not split the difference, so don't plan on this... 


6.) Remember - if you decide to be firm in the listing price and do not want to lower the purchase price to match the appraisal value, keep in mind that the next offer you get may be another financing offer and the next appraiser will likely use the same comps depending on what the absorption rate is in your neighborhood.


Low appraisals S U C K .... but they are going to happen. Cross check with these simple steps and if all else fails, remember to take a step back and analyze the big picture. Is it really worth the gamble of putting the home back on the market and starting from square one? It may be, but really give yourself a couple of hours uninterrupted to talk this out. Heck, even whiteboard it... a visual layout may be the best way to see what direction is best for you.