What To Do When Selling Appraisal Comes In Too Low?

In order for lender to issue a loan to buyer to purchase a property, lender hires an appraiser to evaluate the market value of the subject property to ensure lender's interest. Only comparable market sales (comps) of local properties sold within the last six months are allowed to value your home.

In today's down market, appraisal can come in low due to the fact that our market is foreclosure driven and the bank owned and short sale properties are selling 10% to 40% below market. The value of those short sales and bank owned homes could affect the value of standard sales tremendously.

In order to avoid appraisal problem, home owners need to either bring their price down to the bank owned price level or deal with the appraisal problem after escrow opens.

If the appraisal value comes in too low, there are several possible solutions to the problem:

1. Ask for another appraisal.

2. Protest the appraisal with documentation of your upgraded expenses.

3. Have the buyers make a larger down payment.

4. Lower the selling price to meet the appraised value.

If option 1 and 2 do not work out, combined solution of option 3 and 4 will be the most common practice. Buyer comes in with a larger down payment and seller lower the price by meeting each half way between the sales price and the appraisal value.