You have four options. (1) Lower the sales price to match the bank appraiser’s valuation of your home. And yes, that means you get less money for your home. (2) If you and the buyer agreed to a sales price of $500,000 for your home, and the bank claims it is only worth $450,000, and the buyer was coming up with a $20,000 down payment as a condition of the loan, they will have to come up with an additional $30,000 in down payment money. Which may not be doable for the buyer. (3) Dispute the appraisal. Appraisals are not an exact science. An appraisal is an estimate of what your home is worth by an unbiased third-party, a state licensed appraiser. A different appraiser may come up with a different value. The appraiser, the CURRENT real estate market, which comparable nearby sales the appraiser used, and a variety of other factors play a role in determining the appraised value of your home. So, you might seek a second estimate from a different appraiser. Now, you may have to pay for the second appraisal if your buyer is not willing to pay for it. Plus, the buyer must be OK with you seeking a second opinion. The fact your home was valued at less than what they agreed to pay originally may give them second thoughts. They may think that they overpaid for your home. And, most importantly, if the new appraisal is higher, it must be accepted by your buyer’s lender. It’s tricky, but it may be worth it to keep your sales price at what you originally agreed on. (4) Finally, walk away from the deal. Hope the next buyer does not require an appraisal. Cash buyers sometimes do not have the home appraised since they are not seeking financial assistance from a mortgage company. But, again, you are hoping that this happens. So, how to avoid all this. Price your home accurately and have it reflect the CURRENT real estate market. Just because your neighbor’s smaller home sold for more money when the market was hot, doesn’t mean that yours will be worth more if the market has cooled down. And, how to determine this? At the risk of sounding biased, you should have hired a real estate agent. This is what they do for a living. They, hopefully, would have priced your home correctly by accessing information, that may not have been available to you, to determine pricing. This could have avoided the heartache of believing your home is sold and then have the deal fall apart because of an appraisal which doesn’t match your sales price.
