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Low Appraisal on Your Home Purchase: What to do now?
A low appraisal can feel like a gut point amid your home buying journey. You've found the
perfect place, your offer is accepted, and suddenly, the financing throws a wrench into your
plans. Don't panic! While a low appraisal presents a hurdle, it doesn't necessarily mean the deal
is dead. This blog will provide you with the knowledge and steps to navigate the situation and
potentially save your dream home purchase.
Understanding the Appraisal and Why it Might Be Low
The first step is understanding why the appraisal was lower than the purchase price. Appraisers
consider many factors when determining a home's value, including:
- Comparable properties (comps): The appraisal process significantly emphasizes recent sales of comparable homes in the same neighborhood.
- The property's condition: Upgrades, renovations, and overall condition will positively impact the value, while deferred maintenance or outdated features can lower it.
- Market conditions: A rapidly appreciating or depreciating market can affect the appraised value.
- Square footage and lot size are basic measurements that directly impact valuation.
Taking Action: Strategies to Address the Low Appraisal
Once you and your realtor have reviewed the appraisal report, you can explore several options:
- Challenge the Appraisal: Review the comps used by the appraiser. If there seem to be discrepancies or if relevant comparable sales were overlooked, you can request a reconsideration of value (ROV) with the appraisal company.
- Order a Second Appraisal: If the ROV is unsuccessful, consider getting a second appraisal from a different company. This time, you and your realtor can provide the appraiser with the comps you believe are most relevant. Be aware that a second appraisal comes with an additional cost.
- Negotiate with the Seller: Present the appraisal to the seller and explain the shortfall. Negotiate for a price reduction to bridge the gap between the appraised value and the purchase price.
- Increase Your Down Payment: If you have additional funds available, consider increasing your down payment to cover the difference between the appraised value and the purchase price. This can help ensure you qualify for the loan amount needed to close the deal.
- Explore Gift Funds: With lender approval, some banks allow gifted down payments from family members. This option can be viable if you have willing relatives who can contribute financially.
Making an Informed Decision
It's necessary to consider all the possibilities carefully before deciding how to proceed. Here are
some factors to consider:
- Your Financial Situation: Can you comfortably increase your down payment or cover a shortfall?
- Market Conditions: Is the housing market strong or weak? If it's a strong seller's market, you might have less leverage to negotiate with the seller.
- Your Attachment to the Property: How much do you love this home? Are you willing to walk away or make compromises to secure it?
Seek Professional Guidance
Throughout this process, your realtor is your key partner. They have the experience and expertise
to navigate appraisal issues and advise you on the best action.
Here at Brampton Mortgage Broker, we understand the disappointment and stress that can come
with a low appraisal on your dream home. The Brampton housing market can be competitive,
and financing hurdles can be overwhelming. That’s where we come in. Our team of experienced
mortgage brokers has a proven track record of helping clients overcome appraisal challenges and
secure the financing they need.
Conclusion:
A low appraisal can be a setback, but it doesn't have to derail your home buying journey.
Understanding the reasons behind the appraisal, exploring your options, and working
collaboratively with your realtor can increase your chances of securing your dream home.
Remember, communication and a proactive approach are crucial to finding a solution that works
for you.
Don’t let a low appraisal prevent you from achieving your homeownership goals. Contact
Brampton Mortgage Broker today for a free consultation. We’ll work tirelessly to find a solution
that gets you into your new home.
Contact us today by clicking HERE to schedule a 30-minute meeting. Our team at Brampton
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