The Stern Team: How Should You Deal With a Low Appraisal?
Channel: The Stern Team | KW Salt Lake City Real Estate
Date: 25/10/2017

Nobody wants to have to deal with a low appraisal. Unfortunately, they are quite common. What should you do as a buyer or a seller if an appraisal comes in low? We are here to give you a rundown of all your options. For example, you could make up the difference between the contract price and appraisal price with cash. To learn about all your other options, watch this short video.

Learn more: http://sternteam.org/how-should-you-deal-with-a-low-appraisal.html

ABOUT: 
Looking to buy, sell or invest in a home to live in Salt Lake? Joshua Stern and his team are here to ensure you have an excellent real estate experience. Built in 2002, The Stern Team continues to build our business based upon the same business philosophy we started with, “People don’t care how much we know, until they know how much we care”. With full time dedicated staff, and the “best of the best” agents, we know how to help our clients with their home selling, home buying or real estate investing goals. Ask us about our Worry Free Service Guarantee®, which puts our clients in the driver’s seat. No long term contracts or fear of obligation.

Whether you're downtown, uptown, metro or mountain, Josh’s unique V.I.P. Buyer System guarantees our clients access to properties that match exactly what they’re looking for, literally as they come on the market. Our property lists include homes from EVERY Salt Lake neighborhoods' Realtor and Brokerage. They also include bank owned homes, government owned homes, corporate foreclosures and our own very special PRELIST properties that are not even on the market yet.
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Joshua Stern
The Stern Team
2121 S McClelland, St. #201 
Salt Lake City, UT 84106 
Phone: 801-859-7509
Fax: 801-326-8615

TRANSCRIPTION:
A home appraisal is a part of every home that is bought with financing. Low appraisals can happen for many reasons, including:

Artificially inflated values because of multiple offers
Incorrect evaluation by the underwriter
An inexperienced appraiser who doesn’t understand influences on value
Market values rising due to limited inventory
Appraisers looking at pending sales data from the wrong areas
Declining market values due to fewer buyers shopping among a larger inventory
A fallout from an abundance of foreclosures and short sales in a neighborhood

When you have an appraisal that comes in low, you have quite a few options as a buyer. One is making up the difference between the appraised value and the purchase price in cash. A low appraisal doesn’t mean that a lender won’t lend on a property, it just means that they will only lend up to a certain amount based on the ratio agreed in the contract.

At the same time, the seller could lower their price as well. If the home’s value was inflated due to multiple offers, this is often the best solution. It makes the buyer happy and leaves the lender satisfied. The seller could also offer to carry a second mortgage for the difference. This rarely happens, but it’s still an option. Getting a second appraisal is also an option, although there is no guarantee that it will be higher. 

If you are buying a home with an FHA loan, you’ll need to ask your lender for a list of approved appraisers. An FHA appraisal will stay with a home for an extended period of time. For conventional loans, you are subject to the rules of the HVCC. If an appraisal comes in on your home from a national appraiser and is low, you have every right to contact the lender and demand that a local appraiser be used.

Finally, you always have the option of canceling the transaction with a low appraisal. If you’ve exhausted all other options, this might be the best course of action. 

If you have any questions about low appraisals or anything else relating to real estate, give me a call or send me an email. I look forward to hearing from you soon.