How to Handle A Low Appraisal Like A Champ
The AP boys faced a minor setback this past week, but, as always, displayed an incredible amount of intuition and poise while spinning a negative situation into a positive.
If you’ve been doing your job and keeping up, you’ll know we are under contract for a new house, set to close in a couple weeks. As part of the process, the lender orders an appraisal on the property to ensure they aren’t lending an amount greater than the home’s fair market value. In the event of an appraisal BELOW the purchase price, the onus falls on the buyer to cover the difference. And that’s exactly what happened to the AP boys this past week.
Initially, this was bad news. The appraisal was $2500 below our agreed upon purchase price, which meant our deal became slightly less attractive. That is until my big brain came up with a solution. We were in process of negotiating some amount of seller’s concessions after the inspection, mainly due to the fact that we need to replace the roof. We had requested $4000 in concessions, and the buyer agreed to $2000. My suggestion was rather than getting $2000 in concessions, let’s just ask the seller to drop the price by $2500 to match the appraisal. Genius, I know. The risk in this case is more on the seller, anyways, because we could walk away from the deal if we wanted.
Here’s where it gets even better. With the help of my big brain, our agent was able to work some magic. The seller ultimately agreed to drop the price by $2500 AND give us $2000 in concessions… ballin. Talk about a drastic turn of events. I’m almost getting used to it by now. If there is one thing I’ve learned in my 0.75 years in real estate, it’s to expect the unexpected.
So to sum it all up, don’t be scared off by a low appraisal. Remember that you as the buyer hold a majority of the leverage, and use it to your advantage. We started the week with an overpriced home and $0 in concessions. We ended the week with a deal that is now $4500 more attractive. Funny how things work out sometimes