My Home Appraisal is Lower Than Expected!

If your home is appraised at lower than your sale price, don't freak out. Take real estate expert Tara-Nicholle Nelson's savvy advice.
Home Exterior: Cape Cod Cottage in West Hartford, Conn.

Home Exterior: Cape Cod Cottage in West Hartford, Conn.

Photo by: 2013 Julie Bidwell

2013 Julie Bidwell

By: Tara-Nicholle Nelson

Every professional involved in the sale of your home has the potential to be your best friend or your worst enemy. For example, the appraiser is usually pretty harmless -- the worst they do is inspire a white-glove cleaning to prep your place for their photos. Appraisers do wield the power, though, to derail your deal with a few keystrokes, by typing in an opinion of your home’s fair market value that is below what the buyer agreed to pay. The buyer’s lender requires that the place be appraised at the purchase price, at minimum, so a low appraisal throws a major mortgage monkey wrench into the sale.

I Know the Feeling. If you get word that the buyer’s appraisal came in below value, your first emotional stop will be anger that someone thinks your home is worth even less than the already-too-low sale price -- who does he think he is, anyway, right? Your next stop on the Freak-Out Express is likely to be panic -- the heart-pounding fear that this appraisal glitch might screw the whole sale up, along with your plans for moving on to your next place. Disappointment that things may not come out the way you expected and helplessness to do anything about it round out the understandable pain you might feel from a lower-than-expected appraisal value. But shifting your perspective can put you back in the driver’s seat and take you from victim to victor!

Your Mindset Reset. You’re not alone -- declining values and very cautious appraisers are causing this issue to come up all the time. Appraisers aren’t the bad guys. They’re just under a lot of heat these days, as inflated appraisals have been assigned a lot of the blame for creating the foreclosure crisis. Nowadays, appraisers’ licenses and livelihoods are on the line when they say what a home is worth, so they are understandably much more critical of every property than ever before.

If you’re concerned about how this will impact your deal, clarity is key. Know what your actual bottom line is -- what purchase price will and won’t work for you -- and let that govern your renegotiations with the buyer. At the same time, get real. If the lower value is justified by the comparables, it’s not likely to change with another buyer or another appraiser. You’ll have to choose whether to take a reduced price and close the sale or leave it and hold onto your home. Remember, you’re in control of deciding what you will and won’t take for your home. What’s important is which priorities matter the most to you: getting top dollar or getting closure and moving forward.

Your Drama-Free Real Estate Rx. Review the low appraisal with your Realtor. If she feels like the report is faulty or missed some good, higher comps, ask her to appeal the appraisal, if possible. If the appraisal seems kosher, listen to the buyer’s renegotiation requests and decide what price works for you. It’s a hard choice to make, but it is your choice. If a reduced price seems unavoidable, see if you can ease the ouch by changing some of the other terms, like having the buyer take your place as-is, since they are getting such a great deal. The upshot: You’re not as helpless as you thought!

Next Up

Pricing Your Home to Sell

Follow these tips for pricing your home correctly in a competitive market.

5 Things to Do Before Buying a Home

Property Virgin's Sandra Rinomato shares her to-do list for every first-time homebuyer.

What to Know Before Buying Your First Home

Buying a home is the most important purchase you’re likely to make. You want to get it right.

Unearth the Facts to Buy a Greener Home

Asking the right questions will land the eco-friendly house of your dreams.

Questions to Ask Before Buying A Home with a Friend

The answers to these six questions can make or break your decision to buy a house with a friend.

Money Stuff You Need to Do Before Buying A Home

You know how to look for a house, but the money part is trickier. Here's a step-by-step breakdown of the financial details of a home purchase that need to be worked out months before you want to move in.

Q&A: A NYC Broker on the Benefits of 'Test Driving' Homes

On the fence about a prospective home? Some brokers are letting buyers try out homes before they sign on the dotted line.

How to Recession-Proof Your Home Purchase

First-time homebuyers, word to the wise: Look for attributes that add value to your new home to help combat falling prices. Here, basic guidelines to follow.

Protecting Your Home & Finances in Tough Times

4 steps to take to weather a recession.

Quick Tips for Second-Home Buyers

These four questions will help you decide if a second home is right for you.

Stories We're Following

Shop This Look

Found a living space you love in HGTV's Photo Library? Get the look in your own home with products from Wayfair.

Follow Us Everywhere

Join the party! Don't miss HGTV in your favorite social media feeds.