The Impact Of A Low Appraisal When Selling A Home

Appraisal
An appraisal is a pivotal step in the home selling or buying process.

You’ve found a buyer, agreed on a price, and are popping champagne corks… until the appraisal comes back. A low appraisal can throw a wrench into the smoothest home sale, leaving both buyers and sellers scrambling. Although this can be extremely frustrating, this isn’t necessarily the end of the deal. Let’s dive into how a low valuation impacts a home sale and what you can do to get things back on track.

The importance of an appraisal

An appraisal is an unbiased professional opinion of your home’s market value. For lenders, it determines how much they’re willing to lend the buyer. If this valuation comes in lower than the agreed-upon sale price, it creates an “appraisal gap” – the difference between what the buyer is offering and what the bank says the home is worth. Alternatively, if the valuation comes in higher than the agreed-upon sale price, then there should be no issues for lender.

The fallout of a low appraisal

  • Deal Derailment: The biggest concern is the sale falling through. If the appraisal gap is significant and the buyer can’t cover it, they may be forced to walk away. This means going back on the market, which can take time and cost additional money in marketing and staging.
  • Renegotiation: Many deals can be salvaged through negotiation. You can lower your asking price to meet the appraised value, or the buyer can bridge the gap with a larger down payment.

Mitigating the impact of a low appraisal

  • Know Your Market: Price your home competitively from the start. An overpriced home is more likely to get a low valuation.
  • Pre-Appraisal Prep: Make minor repairs and highlight your home’s best features to make a good impression on the appraiser. Your real estate agent can advise you on what improvements might have the most impact.
  • Challenge the Appraisal (Carefully): If you have evidence that supports a higher value, like recent sales of comparable homes in your area, you can request a reconsideration of the appraisal.

Summary

A low appraisal can be stressful, but it doesn’t have to spell doom for your home sale. By staying informed, working with your real estate agent, and being flexible, you can navigate this hurdle and get your house sold at a fair price.

Are you thinking about buying or selling a home in the South Florida area? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your smartphone or tablet!

By natasha moore

REALTOR® with Live South Florida Realty, Inc.