Hall & Nixon Real Estate, Inc
Erin Nixon & Phyllis Team, Hall & Nixon Real Estate, IncPhone: (252) 435-5043
Email: [email protected]

A home appraisal has come back below purchase price - What's next?

by Erin Nixon & Phyllis Team 07/14/2024

The process of purchasing a home can be tedious, as there are many legalities and service providers you’ll work with to accomplish buying a property. One of these vital steps is the appraisal process, in which mortgage lenders send over a professional appraiser to examine a property.

This is done to make sure its value is equivalent to the loan amount being requested. If you get a low appraisal offer, it’s valuable to know your options to proceed forward in the most orderly way possible. 


What happens if an appraisal comes back lower than the offer price?

Sometimes the appraised value of a home will come back lower than the requested loan amount due to a number of factors. If the home fails to meet certain guidelines, your lender may decide to offer you less funding than originally requested or may not agree to the loan at all. 

However, there are options in favor of the buyer in the case a home appraisal comes in lower than expected. 


How do you negotiate with a seller after a low appraisal?

In the case of a low appraisal, it’s essential to do research to get a better understanding of why the report came back lower than the purchase price. Research the local real estate market because in some cases, if the home has been on the market for a while, the listing price may be outdated. 

If the low appraisal was justified, you can negotiate with the seller to help pay for needed repairs or ask if they can meet you in the middle with their listing price. 


Can buyers back out if the appraisal is low?

If there is an appraisal contingency in the purchase agreement, a buyer can back out of a home purchase if the appraisal comes back too low. This is why it’s vital to examine and pay close attention to detail with the help of your real estate agent to all items in the purchase contract. 

A low home appraisal isn’t the end of your home buying process, it’s simply an obstacle that can be overcome with research and planning. 


About the Author
Author

Erin Nixon & Phyllis Team

Hi, we're Erin & Phyllis and we'd love to assist you. Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having real estate professionals by your side. We'd be honored to put our real estate experience to work for you.