{"id":19701,"date":"2024-11-18T04:00:24","date_gmt":"2024-11-18T12:00:24","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=19701"},"modified":"2024-11-19T10:05:34","modified_gmt":"2024-11-19T18:05:34","slug":"buyer-what-if-appraisal-comes-in-low","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buyer-what-if-appraisal-comes-in-low\/","title":{"rendered":"What If the Appraisal Comes In Low? 6 True Stories About What Buyers Did"},"content":{"rendered":"

You\u2019ve found your dream home, the inspection went smoothly, and everything\u2019s on track, so now you only have to get the home appraised<\/a>, wrap up your mortgage<\/a> loan, and you can start planning your move.<\/p>\n

If all goes well with the appraisal, that is.<\/p>\n

How exactly could an appraisal derail your home purchase? Because a mortgage lender typically won\u2019t lend you more than the home is worth, and an appraisal<\/a> is the method used to determine a home\u2019s value<\/a>.<\/p>\n

\u201cThey want to check their investment,\u201d says Joanne McCoy<\/a>, an agent in Lincoln<\/a>, Nebraska, with more than 18 years of experience. \u201cThey want to make sure the property has appraised for the right value in case something goes wrong down the road, and the bank ends up owning the house.\u201d<\/p>\n

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What's your home worth today?<\/h3>\n

Tell us a little bit about your property and get a preliminary estimate of value in as little as two minutes.<\/p>\n \n

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Why do you need an appraisal?<\/h2>\n

As McCoy noted, banks want to protect themselves, which is why they require appraisals.<\/p>\n

A mortgage<\/a> is a secured loan \u2014 the house and land it sits on serve as collateral for the loan. If a homeowner defaults on their payments and the home goes into foreclosure<\/a>, the bank takes possession of the collateral, also known as the property. And if the homeowner owes more on the loan than the house is worth in the current market<\/a>, the bank will lose even more money. So an appraisal is a bank\u2019s method of verifying the home\u2019s value before the bank will agree to give the homeowner a loan.<\/p>\n

If the appraisal comes in at or above the sales price, the deal can continue. But if it comes in below the sales price then you, the buyer, won\u2019t be able to get a loan for the full sales price.<\/p>\n

While low appraisals are a relatively rare occurrence under stable market conditions \u2014 currently around 8.6%<\/a> \u2014 it\u2019s something to be aware of as a buyer.<\/p>\n

Even if you live in an active seller\u2019s market with low home inventory and competing buyers, low appraisals are not unheard of<\/a>.<\/p>\n

\u201cWe\u2019ve seen low appraisals coming up more often than we have, let\u2019s say, two years ago, but not at an alarming rate,\u201d says Adam Slivka<\/a>, a top real estate agent in the competitive market of Greensburg, Pennsylvania. \u201cIn our area, appraisers have been pretty good about adjusting for the climbing market.\u201d<\/p>\n

That said, low appraisals can happen.<\/p>\n

\n You know what they say about an ounce of prevention being worth a pound of cure? When you\u2019re working with an agent, and they\u2019re perhaps suggesting that you offer above asking price to become competitive \u2014 hopefully, there\u2019s an appraisal contingency as part of that agreement.<\/q>\n
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