A low appraisal may seem like a major misfortune when you’re buying a home — both for you and for your seller. But low real estate appraisals are more common than you think.  A low appraisal doesn’t always mean a canceled deal. It sometimes means you have to pivot and renegotiate.  Let’s look at the 4 most common options you have in New Hampshire when buying a home and the appraisal comes in low.

Go Back To The Seller

Share the report with the seller’s agent that shows the comps used and appraised value.  The seller has the option to either reduce the sales price or tell the buyer “No”.

Bring Some Money

The buyer can increase their down payment to make up the difference. For example, if the buyer needed the appraisal to come in at $300,000 but it comes in at $290,000, the buyer can pay the $10,000 difference in cash. What the lender is concerned about is the ratio of the loan to the appraised value of the home, not necessarily the purchase price.

Appeal The Appraisal

As the person who paid for the appraisal, the buyer can ask their lender to challenge the appraisal if they believe the appraiser used incorrect information or bad comps, or if they weren’t familiar enough with the area.

Cancel The Contract

Not an ideal situation for you or the seller, but if the loan and offer were based on the home appraising, all parties can sign a release of escrow and walk away from the deal.

Remember, appraisers are not all perfect nor are they all the same.  If you cancel the contract, a new buyer can come in and make the same offer and may actually appraise at that sales price.

Your real estate agent is the best source of information about the local community and real estate topics. Give Kevin Cooper a call today at 603-657-6787 to learn more about local areas, discuss selling a house or tour available homes for sale.

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