What happens when you have the best Grand Rapids realtors and are ready to buy your dream house but the appraisal comes in low? Many people hit the panic button because they feel that they aren’t going to be able to make it work. While sometimes the appraisal is accurate and the house is not really worth what you think it is, there are times when mistakes are made.
If you feel that your dream house should be appraised for a higher figure, you can actually dispute it. If you feel that you have some evidence that the house is being unfairly undervalued and you can’t get a loan then you can challenge the appraisal. In this article, we will go over how you can still end up getting financing when your appraisal comes up short.
Have an appraisal contingency
One of the biggest problems about getting a lower-than-expected appraisal is how you end up losing your deposit when you can’t secure financing as a result. If you can’t make up the difference with your own cash, then the seller gets to keep your deposit when you have to withdraw your offer.
The way out of this is to have an appraisal contingency that states that you can renegotiate the asking price. If the seller would rather not budge, or can’t get as close to the appraisal price as you need them to then you can withdraw your offer and still get your deposit back.
Having this done ahead of time is a good way to avoid having to go through the hassle of having the appraisal dispute process work its way out.
Appraiser used the wrong comps
One of the best ways to win a dispute for the appraisal of the home is to draw attention to some of the comps being inadequate. Comps (comparable properties) are commonly used as a metric for what they think your house is worth without considering many of the features of the actual house.
Instead, they look at what similar houses to the one you are buying have sold for in the vicinity as a basis for the value. This can be way off the mark since there are many factors that go into the value of those other houses.
You could ask your realtor to find other comps that have sold for figures closer to what you are thinking of for the value of the home you are interested in. Or, you could have them find flaws in the other comps that make them clearly less valuable such as proximity to something undesirable like a highway or vacant lot.
Sometimes a low appraisal is simply a matter of an error on the part of the appraiser. It is worth looking into to see if there was just a mistake made and that can be clarified quickly. The appraiser may realize that they made the decision based on a mistake and will amend it without it becoming a dispute.