You’ve just had a property appraisal done so you can refinance your home, but the value is much lower than you expected. It’s discouraging, but don’t despair; you have options to keep the.
Let’s say that the asking price is $500K and appraisal price comes in much lower, say $450k. Normally, the lender will not loan funds for a house with an asking price above appraisal. So, the seller may be forced to negotiate with the buyer and lower the selling price.
· In a purchase and sale transaction, an appraisal is used to determine whether the home’s contract price is appropriate given the home’s condition, location, and features. In a refinance, it assures the lender that it isn’t handing the borrower more money than the home is worth.
· When Appraisals Come in Low. Now many banks order appraisals through a third party, typically an appraisal management company, which acts as an intermediary. “In the past, you could communicate that you were unhappy with the appraisal,” said Patrick Galway, an appraiser and the manager of the Town & Country real estate westhampton office.
Most lenders have a process for challenging an appraisal, says Bob Lear, a real estate appraiser for more than two decades. But you must be prepared to point out mistakes the appraiser made in comparing other properties or by missing new or upgraded features in your home.
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· Your mortgage lender will require an appraisal of your new construction home before approving your loan to ensure the property is worth the amount.
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If your appraisal comes in higher than the price in your purchase agreement, congratulations. You and your real estate agent negotiated a great deal. If your appraisal comes in too low, that’s when things get a little tricky. If the seller agrees that the appraisal is fair, they may be open to negotiating a lower price.