What Happens if the Appraisal Comes in LOW or HIGHER Than Our Offer?

What Happens if the Appraisal Comes in LOW or HIGHER Than Our Offer?

Hi, my name is David McKeever, I’m a real estate broker, and today I’m answering the question of:
What happens if the home appraisal comes in low? Or it comes in high?

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Okay, congratulations, you’ve made an offer let’s say you got the home accepted for $400,000. Congratulations on your new purchase! The appraisal gets ordered, the appraiser goes to the house, and he comes in high. What happens then? Well, your under the contract with the seller to buy the home at $400,000 and the price comes in at $415,000 congratulations you now have $15000 in equity.
You have a legal binding contract to purchase that house at $400,000. Now if that appraisal comes in low, you could have a problem. The main problem is your lender will only loan on the appraised value.

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So, if the appraised value comes in at $395,000 they will lend on $395,000. However, you do have the binding contract with the owner at $400,000. So, there are a few things that could happen.

Number one you could renegotiate with the owner to lower the price to $395,000, that’s one option. Second option is you may have to come in with a little bit of extra money to make up the difference of the down payment, that’s the second option. The majority of the cases we see is there’s some sort of negotiation with the seller.

Often times the seller will reduce their price to the appraised value. But it is really is open to negotiation at that point in time as to what happens. I’ve seen it to where the difference is split, so now you’re purchasing the house at $397,500. So, it really depends on the particular situation, the negotiating power of your agent and the listing agent.

Hopefully that helps answer the question of whether an appraisal comes in low or high. If you have any questions please reach out, comment below, thanks for watching.

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David McKeever
Stockton CA Real Estate Broker
209.483.6523
mckeeverrealestate.com
http://mckeeverrealestate.com
CA DRE #01839991