What to do when the appraisal value is less than the purchase price?
Being able to buy their dream home is almost every adult’s aspiration. Buying a home is, however, not easy; the prices are high and it is difficult to cover the cost directly from one’s own pocket. So, of course, it is common to reach out to a lender for a home loan. But sometimes during the home buying process the home’s appraised value falls short of the contracted purchase price, and the amount the lender has to offer is less than what you require to buy your dream home. In case you are facing a similar issue, do not worry because all’s not lost. In this post, we list ways to still go ahead with the deal.
Ways You Can Still Move Forward With The Purchase
Firstly, you can approach the seller to renegotiate the sale price, keeping in mind the initial appraised value. This might lead the seller to reconsider and lower the sales price to the newly appraised value.
Secondly, if the seller is not willing to renegotiate, you can work with your Realtor to contest the valuation by providing additional, relevant comparables of other homes that have sold in the area (referred to as “comps”). Note that there is not a formal method for contestation and there is no guarantee it will change the appraiser’s mind about the valuation. It is also important to note that according to federal regulation the lender cannot contact the appraiser and tried to persuade them to meet a certain value.
Lastly, if you cannot negotiate a new sales price with the seller, nor get a revised appraisal value from the appraiser, then you can still offer to pay in cash the difference between the sales price and the loan amount.
Word Of Caution
Home appraisers do not look into home defects or issues you may face in the future regarding maintenance. Their job is to evaluate the home on the lines of market value, safety and sanitation. So be sure to do get all the checks done personally before you finalize your dream home.