Avoiding Low Home Appraisal
Every mortgage loan borrower, whether they are a home purchase mortgage loan borrower or a homeowners who is a refinance mortgage loan borrower, needs to get a home appraisal. A home appraisal is mandatory from the mortgage lender. The home appraisal is what the mortgage lender goes by when securing their collateral and uses the value of the home appraisal in determining the actual value of the home and not the real estate purchase contract. A Low Home Appraisal can be detrimental for both the home buyers and home sellers and can be the cause of the mortgage loan process to be halted and the end of the transaction. There are ways of avoiding low home appraisal.
Pricing The Home Right
Every home seller wants to get the most for the home they are selling and every home buyer wants to get a deal on the home they are purchasing. Avoiding a low home appraisal can greatly be avoided by doing extensive research on the comparable homes in the area that have sold recently. The listed homes do not count. The home appraiser goes by comparable homes that have been sold and closed and recorded on public records. The homes that sold and closed needs to be in close proximity to the subject property and needs to be similar in square footage and type of construction.
Foreclosures Can Hurt Home Sellers
Low home appraisal is possible for homes that is worth more than the appraised value by the home appraiser if the home appraiser has used foreclosure home sales as comparables in the area. If there are many foreclosure homes that sold in the area you are selling your home, you may want to wait until homes that are not foreclosure homes have sold and closed. Unfortunately, home appraisers will use foreclosure homes as comparables if other homes in the area have not sold and closed.
What Happens If I Get Low Home Appraisal
Most home sellers have experienced real estate agents who do an extensive market analysis and help the home sellers in pricing the sale price of their homes at the right price where there is no issues with low home appraisal issues. However, there are times where a home buyer will get a low home appraisal. If you are a home buyer and get a low home appraisal, do not panic. Everything can be worked out. Your home buyer’s real estate agent and your real estate attorney will be working this low home appraisal issue out with the home sellers, home seller’s realtor, and home seller’s real estate attorney to come to a resolution. In most cases, if the home appraisal is not too much lower than the real estate contract purchase price, the home sellers will normally drop the purchase price and an addendum to the contract with the new negotiated purchase price is written up.
Re-Negotiation After Low Home Appraisal
If the home appraisal comes in substantially lower than the initial agreed upon purchase price, then a re-negotiation is in order. Home sellers with a low home appraisal normally understand and want to work things out with the home buyers. Most of the time, an appraisal rebuttal is useless unless you have solid comparable sales that you can present to the home appraiser. The home buyers mortgage lender will only go off the home appraised value and not the negotiated purchase price. A home buyer and home seller can re-negotiate the purchase contract where they can meet somewhere in the middle pricewise where the home buyer will pay between the original purchase price and the low home appraisal value. If this is the case, then the home buyer needs to come up with the cash difference from the appraised value and the negotiated purchase price. The mortgage loan and down payment will be based on the appraised value of the home. Whatever sellers concessions the home seller gave the home buyer may no longer apply on low home appraisal issues.