The real estate market in the United States is undeniably hot, hot, hot. This
toward pace has resulted in an odd mortgage qualification problem – low
appraisals. Here are your options if you get a low appraisal amount.
Appraisals
An appraisal is simply an effort by a qualified person to put a value on a
property. The process involves a review of the property, other properties in the
area and so on. Mortgage lenders always require appraisals, so you have to deal
with appraisal problems if you are going to get the home.
Let’s assume you have perfect credit, make a ton of money and ready to put
down a solid down payment. You are happy, the lender is happy and the only thing
left to do is get the appraisal. Unfortunately, the appraisal comes in well
below the price you have agreed to pay for the home. Now what?
First, you need to take a deep breath. Buying a home is an emotional process.
Try to step back from the process and objectively analyze whether you are paying
too much for the property. If you still want to proceed, take the appraisal to
the seller and see if you can get the price lowered. A solution should be
possible, but be prepared to walk away if it isn’t.
Second, perhaps the fair market values of properties in the neighborhood are
dropping. We are beginning to see the market cool off, perhaps more so in your
particular neighborhood. If this is the case, kiss the appraiser in thanks for
keeping you out of a bad deal.
Finally, the appraiser may simply be wrong. Appraisers are human and make
mistakes. They may not know the neighborhood well. There are a variety of
reasons you can get an appraisal that is “off.” If you suspect this is the
case, check to make sure the appraiser is comparing the property to comparable
homes in the neighborhood. If all else fails, have your own appraisal done for
comparison purposes.
Ultimately, a low appraisal should be viewed as a potential red flag. If
nothing else, you should take a closer look to make sure you aren’t getting a
bad deal.
Dan Lewis is a mortgage broker with
http://www.gwhomeloans.com - San Diego mortgage brokers providing
home loans and refinances.
