With the recent uncertainty and shifts in the real estate market, REALTORS® are experiencing sale contracts that are falling out of escrow due to appraisals that come in below the agreed upon purchase price.

Low appraisals are not necessarily wrong, but it does create a situation in which the lender might not approve the loan.  The appraiser is merely comparing the value of a certain home with other comparable properties in the area.

Lenders will only fund a mortgage up to a certain percentage of the appraised value of the home.  If the appraisal comes in low, the parties to the transaction must come up with a solution to the problem.

So, what are your options when this happens?

1. Appeal errors or bad comps to the appraiser.  Maybe they miscounted bedrooms or under reported square footage.  If you find errors, or feel like there are more recent, better comps, work with your agent to send the correct information and the applicable comps, to your lender, who can then relay the information to the appraiser.


2. Come up with more cash than you had originally planned to bridge the difference, or you can work with the seller to split the difference.


3. Renegotiate the purchase price.  A low appraisal is a disappointment for everyone, and assuming there are no glaring errors in the appraisal, it might be in the best interest of the seller to bring the purchase price down.  If this sale falls through, and the appraisal was correct, the next deal that comes in front of the seller will most likely result in a similar appraisal.  He reality being that the value of the home is less than the agreed upon price for the home.


4. Change lenders.  Your new lender may have the ability to get your transaction a fresh start or find a way to work around a low appraisal.


5. If all of the above solutions do not work, then you may just have to walk away from the deal.

Feel free to contact me if you are looking for a new home in 2013.

There are a lot of great homes in Yardley, Newtown and all of Bucks County.