North Pittsburgh Sellers Should Consider These Options If Home Doesn’t Appraise after the contract has been accepted. Most Sellers truly don’t understand the consequences of listing their home, accepting an offer only to learn it won’t appraise.
The worst part of this entire situation is that the Seller has lost valuable time on the market, sometimes 25-45 days pass and the Market Conditions may have changed and/or Buyer activity may have slowed down. Which in turn translates into missed opportunities.
#2 Reason-Home Doesn’t Appraise
When a Seller decides to sell their home they should have a in depth discussion with their Realtor as to a realistic price to sell their home. Most Sellers have an idea what their home is worth, but your Realtor will have the most recent values of local homes because they are a member of the Multiple Listing Service (MLS).
Sure there are websites Sellers can go to in order to get a price, but the MLS is the most updated and reliable system used today. Most of the other sites gather information from other sites, and are not real-time based systems. Often, the information found is “stale.”
Let’s say you decide on a price and move forward to list your home for sale. In 2-3 weeks you receive an offer, negotiate and both parties agree on the terms and price. Contract is then signed.
Everything is proceeding well, inspections are completed and you are looking forward to closing. Suddenly you’re informed the home didn’t appraise for the contract price. What do you do?
There are a few options. While the Realtors provide additional comparable homes from the MLS, the appraisal may have already used or decided not to use them. Below are some steps both parties should consider:
- Split the “difference” – Seller comes down and Buyer brings more money to closing.
- Seller reduces price to match appraised value.
- If there’s a Seller’s Assist, Buyer reduces the Amount.
- Buyer cancels the contract and Seller puts the home back on the market.
- Realtors could ask for a “Field Review” with another Appraiser.
- Buyer/Lender change the type of loan.
- DE Underwriter could order a “Second” appraisal if there were merit; i.e., large disparity in the value to contract price.
As a Seller you are taking most of the “risk.” No matter what the final decision is, you want to remain focused on the goal; i.e., to close and move on. The first reaction might be to put the home back on the market; however, there aren’t any guarantees the home will sell for the same price. If it does, you could have appraisal issues again or something else could stop the deal from going through including the home inspection.
The best way to avoid this from happening is to thoroughly discuss the price with your Realtor. An experienced Realtor knows where a home should be priced and if you don’t feel comfortable with the recommended price, it’s oky to say so and come up with a better starting price.
On a final note, before you list your home, you could hire an Independent Appraiser to complete a full appraisal. Be sure to review their price so that you know you are making the right decision and not over pricing your home.
Look for my next Blog, “Negotiations Aren’t Going Well.”