What happens if your home appraised for less

Remember that an appraisal is not the same as a home inspection. What the appraiser is concerned with is determining the condition of the home and, therefore, its value. Here are some of the common culprits.

In a sellers market, bidding wars often drive home sale prices higher than appraisals can support. An appraiser fails to take upgrades, popular features or upscale amenities into account. Comps should be both recent and similar. They should also only be using sold homes, not homes that are currently on the market. If the house appraisal comes back lower than the purchase price, the buyer has a few options to keep the deal alive.

The buyer can increase their down payment to make up the difference. What the lender is concerned about is the ratio of the loan to the appraised value of the home, not necessarily the purchase price. Not an ideal situation for you or the buyer, but if the buyer signed an appraisal contingency, they can cancel the contract and walk away from the deal.

There are a few actions you can take, all before the appraisal. If you luck out and accept an offer from an all-cash buyer, you can avoid the appraisal contingency completely — or at least lessen the potential of a low appraisal harming your deal. According to Zillow research , nearly a quarter 23 percent of all buyers pay cash. Message and data rates apply. I agree to receive a one-time text message containing a link to download the Zillow 3D Home app at the mobile number I provide above, and I confirm that the mobile number is mine.

An iPhone 7 or newer is needed to use the app. Keep copies of the comps and give them to the appraiser when they arrive at the home. One of the most important things that an appraiser assesses is the condition of your home, so make sure it looks clean, tidy and well-maintained.

Clean the gutters, touch up paint, clean thoroughly and make sure major systems are operational. Ask the buyer or their agent for the appraisal report if you believe there is misinformation in it. If the buyer is willing to challenge the appraisal, provide any documentation that could help them make your case, including comps, receipts, information on market conditions, or proof that the appraiser was unfamiliar with your area.

Appraisers are expected to follow the Uniform Standards of Professional Appraisal Practice issued by the Appraisal Foundation, a professional organization, though these standards are not law. The borrower must pay for the appraisal regardless of whether the loan closes because the appraiser still did the work.

At best you can search for recent comparable sales on websites such as Zillow and Redfin, but these records may be inaccurate or incomplete. Appraisal fees vary by state, but appraisers must charge customary and reasonable fees for the area. The value the appraiser gives your home largely depends on the recent sales prices of comparable properties. Getting your home appraised is similar to going on a first date, says Ailion.

While you have no idea how your partner will like or evaluate you, being well-groomed substantially improves your chances of being deemed attractive. Any pets should be contained and [any] smells masked. According to Vaccari, the appraiser cares about the following:.

Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take.

No such subjective considerations apply to an appraisal. Be sure everything works e. You have completed a major step toward refinancing your mortgage and saving money. Being armed with these figures can give you some bargaining power when you meet with your lender. If you want to appeal a low appraisal, you will have a better chance of succeeding if you offer strong data to support your case.

Given the strict federal regulations governing the process, is there anything you can do about a low appraisal? If you are not able to successfully challenge a low appraisal, how do you ensure that the refinance goes through? You can choose to pay the PMI for now. If home values continue to rise, you can later provide comparable sales to your mortgage servicer and ask it to remove PMI, even if you have not yet paid down much of your principal.

The home appraisal process typically takes seven to 10 days. The timeframe depends on the property, the complexity of the appraisal, and the appraiser's schedule i. The appraiser may spend 30 minutes or up to several hours examining the home in-person. Once the appraiser has evaluated the home, it takes a week or two to compile the appraisal report. After the appraisal, the next step is underwriting. The mortgage lender reviews the loan file to ensure everything is in order, assesses the risk, and either approves or denies the application.

Some borrowers might receive conditional approval, meaning some item needs to be resolved or explained. If the mortgage or refi is approved, the next step in the process is closing. If you're trying to buy or refinance a home, a good appraisal is key.

If the appraisal comes in too low, you might not be approved, or you could face higher interest rates. There are a number of factors that can negatively affect your appraisal, including:. In general, the appraisal happens two weeks before the closing date—so it should be ordered about three to four weeks before closing. Understanding how the appraisal process works will give you the best chance of getting an appraiser to assign the highest possible value to your property.

Department of Veterans Affairs. Department of Housing and Urban Development. Federal Deposit Insurance Corporation. Part Appraisals. Government Publishing Office. The Appraisal Foundation. Consumer Financial Protection Bureau. No matter what side of the closing table you are sitting on, there are several things a buyer and seller can do to prevent a low home appraisal before it happens:.

Having a real estate transaction fall through because the appraisal is lower than the offer price can be a waste of time and money for both the seller and the buyer. But the good news is, there are plenty of ways to proactively help prevent a property appraising for less than the contract price such as:. If the appraisal still comes in low despite your best efforts, you can always try to renegotiate the deal.

In many real estate markets today, sellers know that qualified buyers can be hard to find. Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios. Browse Properties. Thinking of selling? Get a FREE property valuation.

What to do if appraisal comes in lower than your offer price. Last updated on October 4, This article, and the Roofstock Blog in general, is intended for informational and educational purposes only, and is not investment, tax, financial planning, legal, or real estate advice.

Roofstock is not your advisor or agent. Please consult your own experts for advice in these areas. Although Roofstock provides information it believes to be accurate, Roofstock makes no representations or warranties about the accuracy or completeness of the information contained on this blog. Roofstock makes it easy to get started in real estate investing.