What to Do if Your Appraisal Came in Lower Than Expected?

A low home appraisal can be an unexpected challenge, especially for seniors looking to sell their homes. It can affect your sale price, financing options, and even your overall plans. But don’t worry—there are ways to handle this situation and come out on top.

Here’s what you can do if your appraisal comes in lower than expected:

Understanding the Appraisal Process

Before diving into solutions, it’s important to understand what a home appraisal is and why it matters.

An appraisal is a licensed professional’s unbiased opinion of a home’s value, primarily used by lenders to ensure the property justifies the loan amount requested by the buyer. If your home’s appraisal comes in lower than the sale price, it can create financing challenges.

Now, let’s look at the steps you can take when your appraisal falls short of expectations.

1. Review the Appraisal Report

Start by carefully reviewing the appraisal report. Check for any errors in the property details—such as the number of bedrooms, bathrooms, or square footage—and confirm all upgrades and features were properly included. If you notice any discrepancies, bring them up with your real estate agent and the appraiser.

2. Request a Reconsideration of Value

If you find mistakes or missing information, you can request a reconsideration of value. This means submitting additional evidence, like comparable home sales or documentation of home improvements, to support a higher valuation. Work closely with your real estate agent to gather the necessary materials.

3. Order a Second Appraisal

If your lender allows it, you can request a second appraisal. While this will incur additional costs, a second opinion may yield a different result, particularly if the original appraiser wasn’t familiar with your neighborhood or overlooked key details. Discuss this option with your agent and lender to see if it’s worthwhile.

4. Negotiate with the Buyer

A low appraisal can open the door for negotiations with the buyer. They may agree to cover the difference between the appraised value and sale price, or you could consider lowering the price to match the appraisal. Flexibility and open communication with the buyer can help resolve the situation.

5. Consider a Different Financing Option

In some cases, switching to a different type of loan could help. Certain loans, such as FHA or VA loans, may have more lenient appraisal standards. Speak with your lender to explore if changing the financing could lead to a higher valuation.

6. Stay Calm and Informed

While a low appraisal is stressful, try to remain calm. Understand that appraisals can be subjective and vary. Being informed and working closely with your real estate agent will help you navigate the process more smoothly.

7. Leverage Your Agent’s Expertise

Your real estate agent is an invaluable resource when dealing with appraisal issues. They can review the report, help you gather supporting information, and communicate effectively with the buyer and lender. Trust their expertise to guide you through the options available.

8. Prepare Thoroughly Before the Appraisal

Ensuring your home is in top shape before the appraisal can prevent low valuations. Complete any minor repairs, deep clean, and provide the appraiser with a list of recent upgrades. Your agent can also supply comparable home sales in the area to help with the assessment.

9. Understand Market Conditions

Local market trends can heavily influence appraisals. Work with your agent to understand how these conditions might affect your home’s value. If the market is down, it might be worth waiting or making strategic improvements before selling.

10. Consider Future Options

If you’re unable to resolve the low appraisal, you may want to take your home off the market temporarily. Use this time to make improvements or wait for market conditions to improve. Relisting later could result in a higher appraisal and a better sale price.

11. Understand Buyer and Lender Perspectives

Both buyers and lenders are impacted by a low appraisal. Buyers might be as frustrated as you, as it could jeopardize their financing. Lenders, however, are bound by the appraised value to protect their investment. Understanding their perspectives can help you find a common solution.

12. Appeal the Appraisal

If you believe the appraisal was incorrect, you can formally appeal it by submitting a request to the lender, along with evidence that supports a higher value. Your agent can help you compile the necessary documents and present the appeal effectively.

13. Enhance Your Home for Future Appraisals

If you decide to relist your home later, use the time to make high-return improvements, such as updating the kitchen or bathrooms, improving curb appeal, or adding energy-efficient upgrades. These changes can boost future appraisals and attract more buyers.

14. Target Cash Buyers

Cash buyers don’t require financing, and therefore aren’t dependent on appraisals. Consider marketing your home to cash buyers or investors who may be more flexible on pricing and willing to overlook a lower appraisal.

15. Educate Yourself on Appraisal Regulations

Appraisers must follow specific local and federal regulations. Familiarizing yourself with these guidelines will help you spot any potential errors in the process and allow you to address them more effectively.

Bottom Line

While a low appraisal can feel like a setback, it doesn’t have to derail your plans to sell your home. By staying informed, reviewing the report for errors, and working with your real estate agent, you can navigate the situation successfully.

For seniors, it’s especially important to leverage your agent’s experience and remain calm. The real estate market can be unpredictable, but there are always options to consider.

If you’re looking to get the most out of your home sale you can reach out to me at (714) 844-5696.