Oh no, the appraisal came in lower than the purchase price. What do I do? Stick around to find out. Hi, welcome back to my channel. If you're new here, my name is Samantha Promen and I'm a realtor located in Central New Jersey. Every week, I post videos about what it's like to live and work here and guide and it's on buying, selling and investing in the area. If this is something that interests you, go ahead and hit that subscribe button below and don't forget to hit the bell so that you're notified of the new videos I release every Monday. Last week, we talked all about what a home appraisal is, when is it needed and what exactly is it based upon? This week, we're going to be talking, what do you do when the home appraisal comes in too low? What are your options, both as a buyer and a seller in that situation? Are there any? Of course there are. And that's what we're going to be talking about today. Now as a buyer, if you're getting financing on the property, your lender or your bank is going to require you get a home appraisal. You see, that's what they're going to base the amount of money on that they're willing to loan to you. You see, they're not willing to loan you more money than what the home is actually work in fair market value. If they were to do that, well, then that would be a bad investment on their part. So they want to make sure, aside from your feelings, the sellers feelings and the listing in buyer's agents feelings, that a third party, a licensed appraisers, going to be coming into the property and evaluating all the aspects of the property, the attributes, the condition and the market conditions to know that you are truly paying a fair price for the home. So what are your options when it comes in too low? Do you have any? Does that mean the whole deal is dead? Well, not exactly. I'm going to use round numbers as we talk through these options just to make it easy for you. Let's say the home is purchase price is $350,000 and the appraisal came in at $340,000. $10,000 below the purchase price. Now option number one would be to make up the difference in the price. So for example, if you're getting financing the property, the lender is going to base the loan on the $340,000 purchase price. So if you would like to make up the extra $10,000 in cash, that if your own pocket, you are free to do so as the buyer. And that certainly is something that the seller is always going to be looking for because they always want the price that they negotiated from the beginning. So the first option is going to be to make up the difference in price out of cash from your pocket. Option number two is going to be renegotiate with the seller. Now as your chance is the buyer or at least the buyer's representation could go back to the seller side and say, look, unfortunately, even though we came to the agreement of $350,000, a licensed appraisal third party objective opinion on the fair market price for the property is $340. Would you be willing to take $340? So it's actually in the seller's best interest to try to work something out with you as the buyer because the appraisal is still going to be there if they went under contract with somebody else. So it's a good idea to try to make this work now. Option number three is to walk away. Now if the seller really won't budge on their price, you're not willing to make up the difference in cash because you don't want to pay an above-praised value for the property which is understandable. And there's nowhere to meet in the middle because sometimes that can happen to maybe instead of $10,000, you guys split the difference up five. You have the option to walk away. Assuming you've done everything else to the contract, contingencies correctly, you'll get your deposit back, you can part ways, and you can go find another house. Now the one thing I always get asked by either buyers or sellers when the appraisal comes in low is why can't we fight it? You absolutely have the opportunity to go back to the appraisal and challenge the current appraisal report. In the situation where you're going to be challenging it, your agent's going to work together with most likely the seller and make sure that the appraisal has all the information about the property, correct, square footage, condition, any upgrades or updates they've made to the property that could affect the pricing. And they're going to review all of the comparable properties that the appraisal used to pull together for the report. And if there's one or two on there that the agent, the seller, the buyer, any party involved feels like it's not the right comparable for the property. And there's one that's better, you can actually submit that as a challenge. Now I will caveat all of this by saying getting an appraisal revised is very, very difficult. There's not very many appraisers out there that are going to accept the challenge and revise an appraisal report. It has happened, yes, but it is very, very rare. So I just wanted everybody out there to understand that, that the chances of getting the challenge accepted and the appraisal report actually revised are very slim. If you liked this video, give it a thumbs up and say hello in the comment section below. Thank you so much for watching this week. I really hope you found this information helpful. If you haven't already done so, consider hitting that subscribe button in the bell so you don't miss the videos I release every week. You know, my goal is to make the content that you are looking for. So if you have a topic or a suggestion for a future video, go ahead and leave it in the comment section below. If you ever watched my other video about what a home appraisal is, I'll leave a link in the description box below. If you're a seller or a homeowner that's getting ready for an appraisal, next week's video is going to be all about getting prepared and how to maximize the value in your appraisal. So stay tuned for that. And I'll see you next week.