Unless you are one of the 23 percent of the population (as of January 2017) lucky enough to pay cash for a residential home, you are at the mercy of the lenders to appraise your next home at the value you need in order to obtain a mortgage.
A home appraisal is a process the lender takes to evaluate the property in terms of its marketability, physical condition and replacement cost.
Appraisers are looking at these factors in the case that the case has to be foreclosed so the lender could re-sell the property quickly with a minimal loss.
Unfortunately, even when both sides agree on a price, the deal could fall apart thanks to an under-appraisal.
So, what can you do if you find yourself in this scenario?
Appeal the appraisal
You have the right to appeal errors or bad comps to the appraiser; read the entire appraisal report, cover to cover. Whether or not you find actual errors in the details about the home you’re buying or selling, check in with your agent about whether the comparable properties used by the appraiser were reasonable.
Order a second appraisal
Yes, it’s ok to ask for a second opinion. If you don’t beleive the first appraisal is accurate or inline with more accurate comparables the lender is likely to discard the first appraisal as inaccurate and go with the second opinion.
Low appraisals disappoint everyone around the negotiating table. If the appraisal comes back low and you decide to walk away, it’s just as likely that another buyer will encounter the same issue. It might be more fruitful to renegotiate with the seller.
Pay the difference or split the difference.
You can always consider your personal situation. With all of the factors that go into the home buying process, you may want to consider just paying or splitting the difference. If you know the seller isn’t making a big profit on the sale of the home and you have the extra cash save yourselves the trouble and appraisal fees.
You could consider changing lenders. The simple act of changing from a mortgage broker to mortgage bank could offer you more control as mortgage banks have more appraisers to choose from.
Don’t be afraid to walk away. If you have an appraisal contingency in your contract, (which you can find out from your lender) you can walk away, get your deposit back, and hope for better luck the next time around.
The Certo Team 55 N. Arizona Place Suite #103 Chandler, AZ 85225 602-429-6789
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