When Real Estate Agent Jeff Sibbach was recently working with a family who was searching for their dream home, they ran into an obstacle that is happening a little more frequently. The house they loved did not appraise by about 5%. Luckily, Sibbach anticipated this happening and informed his buyer of that when they wrote the offer. Click here to view homes for sale in North Scottsdale.
An educated realtor will know when a house is likely to appraise and when it is not. The key is being informed on the house, the comps and the market conditions. At this point in time, banks are being very conservative with what they assign value to, so if you are the seller and you plan on adding a lot of upgrades, be careful because its possible the bank will not assign appropriate value onto it. If the home you are buying or selling does not appraise, here are some options available to you.
Ask the seller to lower the agreed upon price to the appraised value. This is a tough position for the seller to be in. Usually, the seller wants or needs to sell the home, and in the case of death or divorce, sometimes the situation is desperate. In addition, there is no guarantee this whole scenario will not play out again the next time around. On the other hand, the seller could get lucky and the buyer is so emotionally invested in the property and does not want to give it up. But that is a rare occurrence. Not many people want to pay more for their home than it is worth. Lowering to the agreed upon price is probably the best scenario.
The buyer has the option to walk. Most real estate clauses will contain a contingency that will protect the buyer if they cannot obtain a mortgage. If a seller does not agree to the difference, chances are good the buyer will walk away. The buyer most likely does not have a lot invested in the property at this point besides the inspection and related costs. The buyer has the advantage of looking for other properties, or waiting until they find another one that is the right price.
One more choice is to meet somewhere in the middle. Sometimes this can be worked into closing costs or any repairs that may have been negotiated. Or, the seller and the buyer can split the difference. There are many choices when choosing this option. The hardest part might be coming to an agreement. But, it’s not impossible.