Did your home appraisal come in below Selling Price?

Yikes! this is one situation that most sellers don't want to be part of.  Don't despair. Here are a few tips if your home appraisal does come lower than your selling price. Even if your property is in a blessed multiple offer situation. 

Tip 1: Preventing a low appraisal

Get an appraisal before hitting the MLS. Have your agent bring the most relevant comparable and give them to the appraiser.  Remember, the appraiser doesn't have to take them however, it brings

Because of the new third-party rules, the appraiser who is assigning a value to your home may not be from the immediate area.

Options if an appraisal is low

Despite all the best efforts of the agents involved, sometimes an appraisal will come in low. At that point, the buyer has four options:

●Negotiate a lower sales price.

●Dispute the appraisal with the original lender.

●Get a fresh appraisal with a new lender.

●Make up the difference in the mortgage amount from savings.

Lenders’ hands are tied when it comes to the size of a mortgage, which is typically pegged at 80 percent of the property’s value. Because the bank always represents the buyer, the lender’s first choice would be to negotiate a lower purchase price.

If this happens, generally, sellers will grant an extension of that contingency deadline so there’s time to negotiate or challenge the appraisal. If not, the buyer has the right to walk away from the contract under the appraisal contingency. 

If you are in a multiple offer, you could lower the price to second highest bid and see if the buyer could make up the difference.  

If negotiations fail, lenders may be willing to reevaluate the appraisal.

Evers & Co. Real Estate in the District recently sold a renovated Chevy Chase, Md., farmhouse for $1.54 million, after a bidding war raised the price from the $1.495 million listing. The initial appraiser — who drove in from Baltimore — valued the home at $1.45 million, but the sellers refused to renegotiate. When the buyers challenged the appraisal, their bank ordered a fresh appraisal, and a competing lender ordered an appraisal of its own. Both new appraisals came back at the sales price.

However, government-backed mortgages have special restrictions. Appraisals for loans backed by the Veterans Administration or the Federal Housing Administration stick with a property for six months, meaning you can’t just get a fresh appraisal or switch lenders to start with a clean slate.

If negotiations fail and the low appraisal stands, the buyer may be left with no option but to pay the difference — or to walk away under an appraisal contingency in the sales contract.

Best of luck!