7 Steps to Take If Your Appraisal Comes In Low

Appraisals that come in below the agreed-upon purchase price can kill a sale. Having a response plan can save you from losing out on all the hard work you’ve undertaken to find your dream home.

Why does the appraisal matter?

Mortgage lenders will only fund transactions up to a certain percentage of the appraised value of a home. If the home appraises low, either the buyer must come up with an increased down payment, or the parties must agree to a price reduction, or some combination of both of these must happen. If not the deal is off.

1) Comb the appraisal for small errors

Read the appraisal report front-to-back to check for any errors. It’s not unheard of for an appraisal report to miss a bedroom or underreport the home’s square footage.

2) Check the comps

Check in with your agent about whether the comparable properties used by the appraiser were reasonable. If your home was compared with properties from a different neighborhood, school district, town or construction era, they can affect how a property is valued.

3) Request a second opinion

If the appraiser ignores your request to revise the report, escalate your request to your agent or lender who might be able to plead it to the underwriter and request a second appraisal. If the second appraisal supports your claims, the lender is much more likely to consider disregarding the first appraisal, and accepting the second opinion.

4) Renegotiate your sales price

A low appraisal is a lose/lose situation. if the sellers have the leeway (meaning equity) or their bank agrees (in short sales), they might consent to reduce the price or complete some needed work to close the deal.

5) Help close the gap

When trying to negotiate a price reduction, increasing your down payment to help sellers close the valuation gap can be a great motivational tool. Some buyers refuse to do this because they feel like they’re overpaying for the property. Others are willing to kick in a little extra dough to get the home they want. Work with your agent to figure out which bargaining position works for you.

6) Change lender divisions

Many experienced local mortgage brokers work for companies that also have banking divisions, which they might use to process your loan and work around a low appraisal. Ask your mortgage broker it their office has a banking division.

7) Change your lending company

Mortgage brokers can no longer cherry-pick appraisers for a given transaction. Make sure your appraisal is conducted by a local professional who understands and appreciates nuances like neighborhood, school district or construction era.

Speak with your agent

If you feel that a property you’re interested in is worth a higher price, talk to your agent and lender about these seven strategies and other lending options you can use to overcome an appraisal hurdle that threatens your ownership dreams.

Recent Articles

home inspection santa barbara

13 Things Santa Barbara Homebuyers Should Know About Inspections

If you’re not familiar with home inspections, then you might have a lot of questions about what gets inspected, how thorough the inspectors are, why you even need one, and what you can expect if you’re walking with an inspector through the house you’re hoping to buy in santa barbara. There’s a lot to know…

signs of a good real estate agent

21 Telltale Signs of a Good Real Estate Agent

Just like in any other profession, there are good real estate agents … and there are, unfortunately, subpar real estate agents, too. But how do you know if you’ve got a dreamboat or a dud handling your real estate transaction? One way to know whether you’ve got a good agent (or not) is to consider…


10 Tax Breaks for Santa Barbara Home Owners

Being a homeowner definitely has its advantages, and saving money on your taxes each year just might be at the top of the list. Make sure you’re taking advantage of these common tax perks as a homeowner: 1) Mortgage interest One of the most common tax perks, you can deduct mortgage interest for your primary…


4 Questions to Ask Before Selling Your Santa Barbara Home

There comes a time in every home owner’s life when he or she realizes: “I am not the same person I was when I bought this place.” Maybe your lifestyle or your family configuration has changed, or maybe the house just isn’t as appealing as it was when you signed that ream of paperwork on…

overhead view of couple moving in to new home and using wireless internet on tablet computer

5 Mistakes to Avoid When Buying a House in Santa Barbara

Buying a home can be an anxiety-ridden process, and that potential anxiety gets amplified for anyone who’s embarking on homeownership for the very first time. There’s so much to do and so much you don’t know that “being overwhelmed” hardly seems like an appropriate description of how it feels. And even though you don’t want…

daniel zia magazine cover

Daniel Zia Awarded Cover & Featured Interview In World Class Magazines

Founder of Zia Group, Daniel Zia, was awarded the cover and featured interview in World Class Magazines. Below, you can read the complete article written by author Katrina World. Focus, appears to be fundamental to Daniel Zia and his Zia Group’s business strategy. Zia surrounds himself with a stellar team of eight, each centering in…