What Are Your Options If Appraisal Comes in Low?

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In today's fast paced real estate market property prices go up faster than our heartbeats.
This further increases the hurdles of real estate appraisal.
Often mistakes happen from the appraisers who do not have enough geographical knowledge about the area in which your property is located but mistakes may happen from experienced appraisers too.
And we can't blame appraisers only...
rules have changed significantly in the last few years that they're nearly handcuffed.
Or even if you blame them, still the question bigger than everything else is this - what can you do if your appraisal comes low? Well, there are a few options which can be tried in the case of low appraisal.
Of course, you've the choice of disputing the appraisal but there are also some less time consuming alternatives which are worth trying.
In this article we'll try to look carefully at all such alternatives.
  1. Negotiation: This is the very first option that you can try.
    And probably, it's also the best option for you in many cases.
    If both parties adjust their requirements a bit then a fine deal can be done in most transactions.
  2. Buyer makes up the difference: A low appraisal doesn't mean that the lender won't lend.
    As long as the loan-to-value ratio remains secure for the lender, he won't block your transaction.
    If buyer makes up the difference in cash then the transaction may take place successfully.
  3. Seller offers a second mortgage to fill-up the difference: If buyer can't make up the difference then there's the option of lump sum payment or payment at a later date to the seller.
    These options can be kept in the category of secondary mortgage.
  4. Disputing the appraisal: If any of the above mentioned options doesn't seem fine to you then you can dispute the appraisal and order a second appraisal of your property.
    First of all if your loan is an FHA loan then ask your lender for a list of approved appraisers.
    Seller or buyer anyone can pay for the second appraisal.
    In some cases, second appraisal may come at a higher value than the first (especially if the first appraiser was inexperienced or had less geographical knowledge about the area).
  5. Supply a list of comps to the underwriter: Contact the agents who are involved in the transaction to compile a list of comps.
    Supply that list to the underwriter and ask for a review of the whole appraisal.
  6. And if nothing works, cancel the transaction: Of course, if nothing given above seems to be working for the deal then the last option that you've is to cancel the transaction.
I hope that you won't need to choose the last step in most circumstances.
All the best for your real estate transaction!
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