House Didn’t Appraise? Now What?

July 25, 2008 | By Kelley Koehler | Filed Under Loans and Financing

Most often, with the contracts my Buyers and I negotiate, the homes appraise easily for the sales price. However, every once in a while, a low appraisal comes in.

In Tucson real estate, using the typical resale contract, once we find out that the home didn’t appraise, it starts a 5 day clock, within which the Buyer can walk away from the deal with their earnest money.

But that’s not what typically happens. Usually, in those 5 days, we go back and negotiate with the Seller, try to strike a new deal before the 5 days expires.

As a Seller, you can hold firm, wait for that Buyer to walk away, and hope the next offer is at least as high and that the next appraisal will come in at the sales price. Or, you can try to hold on to the deal at hand and reduce your price.

Of course, remember that a low appraisal doesn’t mean that the Buyer has to walk away. It’s their choice, certainly. But if a Buyer is putting down enough money, if the loan to value ratio is low enough, then some banks won’t care if the appraisal is slightly lower than the sales price.

tags: appraisal, contract, real estate, tucson

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