How to Buy a Home With a Low Appraisal
A home appraisal is required by your mortgage lender when you purchase a property. It’s also recommended if you intend to buy a home with a loan. While you can opt not to get one, do remember that skipping one may cost you more money than the home is worth. Home inspections are not the same as an appraisal, which determines the condition of a property and its value. Many home-buying contracts contain contingencies that require you to get an appraisal, such as finding out if the property is habitable or livable.
In general, a home’s location is the largest determinant of its value. The more coveted the location, the higher the appraisal price. However, many factors may affect the appraisal, including the location. If the location isn’t desirable, you’ll have to make improvements to improve its value. Some of these improvements may be as simple as making your home look cleaner or completing some minor repairs. However, if you are financing the purchase, the best way to get the appraisal is to avoid buying a home with a low appraised value.
A low appraisal can help you bargain with the seller, but it can also slow down the process. Once the appraiser has determined that the home is worth less than you had originally thought, you can try to negotiate a lower price with the seller or walk away. If you are desperate to buy a house, you can opt to pay the difference between the selling price and the appraisal value. However, if the appraised value is higher, you may have to pay the seller a higher amount.
Alternatively, you can demand an exception from the appraiser. A broker can identify key oversights and demand for an exception. However, such requests can take a week, and they’re not guaranteed. To avoid any complications, you can put more money down than the property’s worth or pay cash to cover the difference. If the appraiser says that your property is worth more than the appraisal, you may want to appeal the decision. This is a great option if you’re not satisfied with the result of the appraisal.
In a competitive market, you may face multiple offers. If your offer falls short of the appraisal value, you can ask the seller to lower the price. This strategy can work in some situations, especially if the seller has just listed the property. In these cases, you may find that the seller is more lenient than usual, and if the appraisal value is low, the next buyer might offer you a lower price. Then you can negotiate a lower purchase price to avoid increased financial responsibility.
Although it can be frustrating when your appraisal comes in lower than the contract price, the appraisal process is not without its advantages. If the appraisal is too low, you can negotiate with the seller or bring more cash to the closing. The seller might accept the lower price if you’re willing to negotiate. If the appraisal is too low, it might force you to negotiate with the seller, which may result in a lower price. In the end, you could get the house you want – but the seller may still balk at the price.