Low home appraisals: Understanding the next steps - Julie Burgey Kehoe

Low home appraisals: Understanding the next steps

by Julie Burgey Kehoe 12/02/2024

The process of purchasing a home can be tedious, as there are many legalities and service providers you’ll work with to accomplish buying a property. One of these vital steps is the appraisal process, in which mortgage lenders send over a professional appraiser to examine a property.

This is done to make sure its value is equivalent to the loan amount being requested. If you get a low appraisal offer, it’s valuable to know your options to proceed forward in the most orderly way possible. 


What happens if an appraisal comes back lower than the offer price?

Sometimes the appraised value of a home will come back lower than the requested loan amount due to a number of factors. If the home fails to meet certain guidelines, your lender may decide to offer you less funding than originally requested or may not agree to the loan at all. 

However, there are options in favor of the buyer in the case a home appraisal comes in lower than expected. 


How do you negotiate with a seller after a low appraisal?

In the case of a low appraisal, it’s essential to do research to get a better understanding of why the report came back lower than the purchase price. Research the local real estate market because in some cases, if the home has been on the market for a while, the listing price may be outdated. 

If the low appraisal was justified, you can negotiate with the seller to help pay for needed repairs or ask if they can meet you in the middle with their listing price. 


Can buyers back out if the appraisal is low?

If there is an appraisal contingency in the purchase agreement, a buyer can back out of a home purchase if the appraisal comes back too low. This is why it’s vital to examine and pay close attention to detail with the help of your real estate agent to all items in the purchase contract. 

A low home appraisal isn’t the end of your home buying process, it’s simply an obstacle that can be overcome with research and planning. 


About the Author
Author

Julie Burgey Kehoe

Your Realtor for Life

My Goal as a Real Estate professional is to provide the highest level of service for my clients. I feel that it is important to provide an array of information and services regarding all of your Real Estate needs. Services include (but not limited to): Home Market Evaluation, Home Staging, Home Search and Home Research, Problem Solving, Home Sale & Purchase Negotiations, Home Inspection and Appraisal & Mortgage Pre-approval Coordination, Strategic Offer Writing. My focus is helping Sellers and Buyers through the entire transaction process, from start to finish.