You’re about to cross the finish line with a sale when the worst-case scenario happens: the appraisal comes back lower than anticipated. MUCH lower. Unfortunately, neither the amount of money the seller would like nor the amount the buyer is willing to pay will impact the appraisal amount. In their 2021 REALTORS® Confidence Index Survey, the National Association of REALTORS® reported that twenty percent of delayed settlements were due to appraisal issues. 

The good news is that, according to Fannie Mae, appraisals come in low less than eight percent of the time. There are options when it does happen, but you will need to make sure that any actions you take are within state regulations.  

Set Yourself up for Success

• Price the home appropriately and manage the seller’s expectations, especially regarding the perceived value of renovations and upgrades. And while bidding wars may seem like a good idea, they can inflate the price beyond what is reasonably expected from an appraisal.
• Order a pre-listing appraisal.
• Ensure the homeowner has the property in the best shape possible before the appraisal and that the home is appropriately staged (if applicable).
• Be prepared to provide data to the appraiser that may not be on the listing sheet, including multiple offers on the property.
• Consider meeting the appraiser at the property to answer any questions.

If the Appraisal is Low

• Ask for a copy of the appraisal and look for mistakes.
• Contact the lender and appeal the appraisal. Make sure you are using the proper channels for this process. 
• Look for another lender who would use a different appraiser. Keep in mind that this will come at a cost, and there is no guarantee that the new appraisal will come in higher. 
• Return to the negotiating table: The buyer may have the ability to make up the difference between the appraisal price and the contract price in cash, the seller may be willing to agree to sell for the appraisal amount, or negotiate a way to split the difference to keep the deal from falling through.