When the appraisal comes in too low

Posted at 5:10 AM, Aug. 8, 2006

You, as a buyer, have looked and looked for a home, have finally found it, and have put an offer on it which has been accepted by the seller.  Because you have looked at a lot of homes, you feel that the price on this new home is fair, and a price that you are willing to pay. 

One of the steps in going to closing with a mortgage lender is getting an appraisal.  Also, the contract usually stipulates that the property must appraise for at least the sales/contract amount. What if the appraisal comes in lower than the contract amount?

Usually, if the difference is small, --either-- the seller will agree to just reduce the sales price to the appraised value.  Or, the buyer may agree to come up with the difference (if they have the available cash). 

Recently, we heard of a case where the seller had bought a new house in a booming area, closed on it, then for whatever reason, decided to put it back on the market at a $80,000 increase in sales price.  Even though the neighborhood values were increasing, and the larger community values probably supported the value, the appraisal did not come in for the full sales value.

The seller and buyer did not come to agreement on this.  The seller was not willing to lower the price, nor was the buyer willing to come up with extra cash.

Occasionally, but not often, it works out that way.