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What Is A Seller To Do When The Appraisal Comes Back Lower Than The Escalated Contract Price |
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 You're ready to sell your home. Great! We look at comparable sales and decide that your home is likely to sell for $300K in the current market. We debate pricing your home for $299K or $305K and end up going with $305K because we're optimistic about the strength of the current market. After 20 showings in 48 hours, we receive eight offers with prices ranging from $305K to $335K. We settle on the contract with a price of $330K because of some of the other terms included in the offer. Then, the buyer gets the appraisal back and your house appraised for $300K -- all the way back to what we thought it was worth before putting it on the market. The only way the buyer can pay over that $300K is if they scrape together extra cash to bring to closing. They love your house and they find a way to come up with $5K so that they can pay $305K for your house -- but they are not able to pay the $330K contract price that you and they had agreed to some weeks back. Now you, as a seller, have some options to consider... Option 1 - Sell At Or Just Above The Appraised Value Perhaps you look at the big picture and decide that you are OK selling for the price you figured your house with worth ($300K) and maybe a bit above that ($305K) despite the short-lived excitement of thinking you would be selling your house for more than you thought it was worth. It can be somewhat difficult to come to this conclusions -- after all -- a day before the appraisal report was completed you thought you were selling your house for $25K more ($330K) than you would now ($305K) be selling your house. Option 2 - Put Your House Back On The Market And Hope For A Cash Buyer The only way to get completely around an appraisal with certainty is to sell to a cash buyer. It might seem farfetched to think there would be a cash buyer for your home -- but it is definitely possible depending on the price point, property type, etc. Option 3 - Put Your House Back On The Market And Hope For A Buyer Willing To Pay Over Appraised Value If you're not selling to a cash buyer, perhaps you will be able to find a buyer who will contract to buy your home at a price above where you know it recently appraised AND that is willing and able to pay a certain amount above the appraised value. Again, this is not all that farfetched. If a buyer had made an offer of $335K, previously, and now could agree to pay $320K for your house ($15K more than the buyer you are/were under contract with) so long as they were OK with paying up to $20K above the appraised value - they might be quite excited to do so. After all, they were ready to pay $335K for the house -- only having to pay $320K (even with a $300K appraisal) might be seen as a great opportunity. As you think through all of this, you'll likely also be thinking about the value of just moving forward with the buyer who is already under contract to buy your home. Yes, it is likely going to be easier and faster to move forward with that buyer -- but you may be walking away from $10K or $15K or even more by not exploring interest that may exist from other buyers. Recent Articles:
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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Commonwealth of Virginia
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