My Appraisal Came Back Too Low, What Do I Do Now?

The process of buying a San Diego house can feel like riding a roller coaster. After months of searching for the right house and coming to an agreement on the purchase price in terms with the seller, it can still fall through. If you’re obtaining a mortgage for your house you will most likely be required to have a home appraisal done. If your San Diego house doesn’t appraise for enough, the lender is not going to want to write your loan as the terms stand.

So, what are you supposed to do?

1. Get a second appraisal

If the San Diego house doesn’t appraise for enough but the comps look like it should, you can consider ordering a second appraisal. This does come at a cost as you will need to pay the second appraiser as well as the first. On occasion, and in order to help the deal, you can ask the seller or real estate agent to help cover the cost of this appraisal.

2. Fight the appraisal

The technical term for this is a “rebuttal of value.” This process involves all parties working together including the seller, the real estate agent, and the loan officer. All parties will work together to look at the comps and try to prove to the appraiser why the value was off in the original appraisal.

When they have pinpointed what the problem was, the lender will appeal the appraisal with the newly found information. However, be aware that this is a difficult fight to win.

3. Make up the difference

If you really want the San Diego house and have the funds, you can make up the difference on the loan. The lender doesn’t really care if you buy a house for more than the asking price; they just don’t want to take the fall for it.

That means if you are willing to pay cash for the difference they will still write the loan for the part that they can approve.

4. Start the negotiation process again

If the San Diego house isn’t going to appraise for what you are trying to purchase it for then most likely another buyer isn’t going to have better luck with the house. This means that the seller may be willing to drop the price of the San Diego house further to keep you from walking away from the deal.

5. Walk away from the deal

As long as it was written into your offer that the San Diego house was contingent on the appraisal, which it most likely was if you are obtaining a mortgage, then you can just walk away. If the seller doesn’t want to lower the price further, or if you have just changed your mind about the house altogether, then you can start looking for another San Diego house.

A low appraisal does not mean it needs to be the end of your buying process. Try out these above strategies to correct the problem. But be prepared that if they do not work, you might have to walk away.