What Are Your Options When The Appraisal Value Of Your Dream Home Is Lower Than The Selling Price?
Many people get ecstatic when they finally find the home that they have envisioned. Sometimes that excitement can fizzle when things do not go as expected. One thing that can occur is discovering that the home you fell in love with appraised for less than the selling price. At first, it may seem like you need to keep shopping for a home. You may also be still interested in buying but want to know what actions you can take to protect your own interests.
The seller may have made an honest mistake when they determined their selling price. It is common for some individuals to assume their home is worth more especially if they made a few upgrades prior to placing their homes on the market. There are also situations when sellers make an effort to recoup investments such as renovations by adding them to their selling price. Some technology-driven individuals even rely on online calculators to determine the value of their homes without realizing that there are numerous factors that will affect the accuracy of the estimated values they receive. For example, property values in the area may have dropped recently, which is something that a seller may be unaware of.
Raise More Money
You likely know that you will have to pay a percentage of your mortgage upfront. The lender will cover the other portion. This means that if the seller refuses to lower their selling price and you still want the home, you will need to try to raise more capital to cover your down payment for the home. Perhaps this is not an option or you may feel like it will be difficult. You could continue to look for other appealing homes while keeping the "dream home" on your radar. If the appraisal was correct, other interested buyers will likely discover it, which means the seller may have a tough time selling the home. After a few months, they might be willing to re-negotiate.
You may think that an appraisal value is always correct. However, it is possible for an appraiser to make a mistake. This is why it is ideal to choose an appraiser who has worked within a few miles radius of where the home you are interested in is located. It is wise to get a second opinion especially if the homeowner has had a professional appraisal too and their appraisal value differs from the one you were given
A real estate agent is a good resource for buyers and sellers to use. They can ensure that appraisal values are on-point prior to placing homes on the market. They can also help with negotiations and can be considered non-bias since their goal is to help both buyers and sellers reach agreements.