What to Do If Your Home Doesn’t Appraise

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chris.ha • Feb 16, 2021

Here are some options if the home doesn't appraise.

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With the current hot real estate market, we’re seeing multiple offers, bidding wars, and prices getting bid up. So what do you do as a seller if your home doesn’t appraise? My partner Lindsay Carlile joins me today to discuss your options. There are many avenues you can take if this happens to you:

1. Do a rebuttal. The best course of action is to rebut the appraisal you received. In the beginning, we always meet with the appraiser and give them a packet of comparable properties and a list of upgrades to the house. However, the appraiser is human, so occasionally an error is made. So we’ll comb through the appraisal report and see if any mistakes have been made. If so, we can argue the appraised price and hopefully get a price correction.

If no miscalculations were made, we can provide them with more comparable sales with the hope of increasing the price. That can be challenging to get done, however, it does happen.

2. Adjust the loan-to-value ratio. If rebutting the appraisal doesn’t work out, we have to think outside the box. If the buyer is paying more than the minimum down payment, we can adjust the loan-to-value ratio, which doesn’t affect the buyer or seller much.

"If the buyer truly wants the property, they can pay the difference between the sale price and appraised value in cash."

3. The buyer can pay the difference. If the buyer truly wants this property, they can pay the difference between the sale price and appraised value in cash. However, not every buyer will have that cash.

4. Renegotiate the terms of the contract. There are many buyers in the Bay area right now, and only about 11% are paying completely with cash. However, even if they aren’t paying with cash, many buyers still have cash in reserve for these types of issues. So renegotiating to make both parties happy can be achieved.

5. Ask backup offer submitters to increase their offers. If renegotiations don’t go well, we can contact the backup offers to see if they’re interested in raising their offers to what the seller needs. With the low inventory we’re seeing these days, we can often find a buyer willing to do what’s needed to get the home.

The worst-case scenario is renegotiating and having the buyer pay the appraised value; we’ve been a bit spoiled in the recent market because buyers have been paying more. Paying the market value of a house is what’s common in a typical market. The bottom line is that we have options and strategies to help both sellers and buyers navigate through the complexities of any real estate transaction.

If you have any questions about your low appraisal options or real estate in general, please feel free to give me a call or send an email. I would love to help you.

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