The home sales process is lined with pitfalls that can set back or completely derail the sale of your Connecticut house, especially if the appraisal comes back lower than the offer.
If your property fails an inspection, this may be a result of one of two problems: your home’s appraisal coming in below the sales price or there are safety or repair issues with your house.
What happens when the appraisal comes back lower than the offer? Below, we’ll recommend some solutions for the two major appraisal issues.
What is an appraisal?
An appraisal is required by the buyer’s lending institution to determine the home’s fair market value. This way, the lender can ensure the amount of money it lends to your buyer, for the home does not exceed its value. If the appraisal comes back lower than the offer, you have a problem on your hands.
Why do you need an appraisal?
Buyers are required to pay for an appraisal as part of their mortgage application, and since most buyers need a mortgage to buy a house, it will be impossible to sell your house without passing an appraisal inspection.
What can I do if my Connecticut house appraisal comes back lower than the offer?
It is disheartening when you sign a sales contract, estimate your profit and plan your next move only to find out weeks later that your house appraisal comes back lower than the offer.
Depending on the difference between the price you agreed to sell your house and the appraised value, it can be a minor monetary loss or could derail the sale for good.
We have listed several steps you can take to resolve an appraisal value issue, from those that will not cost you a penny to the ones that will have the greatest economic impact.
#1 Contest the appraised value
If you feel that the appraiser is wrong and you have data that can back up your sales price, then you can try to contest the appraised value via your real estate agent.
Your agent may have a working relationship with the appraiser. With credible information about on and off market comparable sales, he may convince the appraiser to reconsider the appraised value.
#2 Ask the buyer to pay for the difference
If the appraisal comes back lower than the offer, you can ask the buyers to pay the difference between the appraised value and the contract sales price at closing.
There is an outside chance your buyers may be willing to pay more for the house, especially if you are in a sellers’ market where prices are rising rapidly.
It may be worth it for you buyer to increase the price and close on your house now rather than spending months looking for a new house in a tight market only to have to pay more in the future.
#3 Negotiate with the buyer to meet in the middle
If you are unable to convince the appraiser to reconsider the appraised value and you are in a slow sellers’ market, you can ask the buyer to meet you in the middle.
You can show the buyer you are reasonable by reducing the price of the house by half and request the buyer to increase his offer by 50%.
#4 Negotiate with your agent and buyer
If the above step fails, then you can reduce the price by a 1/3, ask your real estate agent to reduce their commission by 1/3 and request the buyer to increase their offer price by 1/3.
Most agents will refuse to reduce their commission and many real estate brokers have a standard company policy not to negotiate commissions.
Nonetheless, with the possibility that your agent may lose the full commission, he may be willing to work with you.
#5 Lower the sales price to the appraised value
As a last resort, if you want to sell your house and a reduced sales price will not keep you from moving on with your plans, then you will have to reduce the price of your house.
#6 Speak to a property investor
If the appraisal comes back lower than the offer, you are not presented with many valuable choices to sell your home. Not only will you lose money, but it will be a stressful and time consuming process, as you will have to go back and forth negotiating with various parties or make changes to your home so it can pass a future inspection.
Instead, you can explore the option of a property buying company. They will take the hassle out of the sale for you, as they purchase properties in any condition.
What can I do if an appraisal report requires major repairs?
An appraiser will not only look to establish the fair market value of a property but also to require repairs or inspections when they spot potential health, safety, and system or structural problems.
Fortunately, most repair issues that concern appraisers are minor. Occasionally however, an appraisal report may point out a major plumbing, electrical or structural problem.
In these cases the appraisal is normally subject to the repairs being completed or the issuance of a satisfactory report by a certified home inspector. This can cost you a lot of money in repairs, and be a time consuming process to endure.
One sure way to sell your house, even if there are major repair issues, is to avoid the appraisal entirely. You can do this by selling your house to professional property investors who buy homes quickly with cash.
Here at CT Cash Homes, our ability to purchase Connecticut houses for cash helps us avoid the need for bank appraisals and home inspections, which means you can sell your house “as is” without the usual headaches of selling your house the traditional way.
What’s more, we can give you an on-the-spot offer on your house and close in as fast as 7 days. Contact us today to learn more.