How to Handle a Low Appraisal on Your Sioux Falls Home
Unless you receive a cash offer, there really is no way to avoid appraisals. Any home purchase that is financed through a mortgage involves an appraisal so the lender can make sure the size of the loan isn’t greater than the value of the collateral, or the home. While a low appraisal may seem like an immediate deal breaker, it is not uncommon for property to be appraised for less than the purchase price. Also, while the real estate market in Sioux Falls is on the rise, low appraisals happen in both hot and cold markets. Having an experienced real estate professional, who is familiar and knowledgeable of the Sioux Falls area, on your team can make all the difference during these situations.
Tips on How to Deal With a Low Appraisal
- Stay Calm. The most important thing to remember is to stay calm. This may be easier said than done, but it is necessary in order to correct the situation. This will allow you to look at all the facts and make the best decisions. Also, have discussions with your Sioux Falls agent about your decisions and let them do all the negotiating.
- Request a Second Appraisal. In some situations, a second appraisal can come in handy. If the first underwriter is new to the business or not very familiar with the specific Sioux Falls area, low appraisals are common. Because appraisals are highly dependent on the underwriter appraising the home, a second appraisal is a good idea in these situations. However, only the lender and the buyer can request a second appraisal.
- Review the Appraisal. If you have reviewed the Sioux Falls neighborhood sold reports and recent sales in your area and still believe that the appraisal is low, ask for a review of the appraisal. Have your agent supply the underwriter with a list of comparable sales to help him re-appraise your home for a more reasonable amount.
- Ask the Buyer to Cover the Difference. If the technology and gadgets you have in your Sioux Falls home were not recognized, it could result in a low appraisal because no other home is comparable to yours. The buyer may recognize all of the additional features your home has, maybe it is the ideal location for them or it has the perfect nook they are looking for. Whatever the reason, the buyer may be willing to cover the difference in order to make this their new home.
- Split the Difference. If the buyer doesn’t have the extra money to cover the difference completely, consider splitting the difference with them. The buyer would add 50% of the difference to their initial down payment and you, the seller, would reduce the price 50% of the difference. This seems to be the most common outcome in these situations, where each party is willing to compromise.
- Reduce the Price. One reason that homes end up with low appraisals is due to the fact that they were initially over-priced. Review recent sales reports and find comparable homes in your Sioux Falls area to find the right price for your home. Also, consider your specific situation to determine if reducing the price to be closer to the appraised value is worth not having to wait until another buyer makes an offer.
- Wait For Another Buyer. If neither party is willing to budge, the low appraisal will end in a deal breaker. You are left with the opportunity to put your home back on the Sioux Falls market. You may end up finding a buyer that makes a cash offer, which wouldn’t result in a appraisal. Or, you may find a buyer that absolutely adores your property and is willing to make the extra commitment to make it their new home.
Sell Your Home in Sioux Falls
Having an expert real estate professional on your side during these difficult situations can be extremely beneficial. Having the right agent can also help during the negotiation process, and help you avoid low appraisals. The Fisher Sisters team has a lot of experience working with a variety of homes in Sioux Falls and can help you get the most money for your property. Contact us today and find out how we can stage your home to increase the value as much as 10% more than its competition!