What if Your Home Doesn't Appraise?

Let me give you an example story about why you want your home to appraise at or above the value of the accepted offer...

You may feel that your house is worth $215,000. You set your sale price at $217,000. You have multiple offers to choose from. One is 213, one is 214,500, and the other is 216 because they know there's a shortage of good homes for sale and they LOVE your home. They want it bad. 

You're thinking, "Yes! We're going to get what we want, maybe more!"

Did you know that the bank that loans the money to borrow needs to have the home appraised? Because they need to know if you default... that they can get their money back if they need to sell it. 

The house appraiser goes off of "comps" or comparables.  Referring to properties with characteristics that are similar to a subject property whose value is being sought.  Meaning that they'll look at similar homes that have sold in your area. And sometimes those homes have to be within a really small area around your home (depending on the loan type). So, that can make a big difference.

The appraisal comes back at $207,000.  You're thinking, "What? That's not right."  But it all has to do with the "comps". And sometimes it doesn't seem real fair. Sometimes it might not be. But we don't make the rules. The bank with the money to lend does.

Now, the buyer has the option to negotiate again. They may want to offer you 207. But one of the other offers might want the home bad too... and offer you 210 because they don't need to borrow the full amount.  Maybe they have enough to put down and don't mind if they're paying a bit more than the appraised value.  But you still may want to hold out for 215. That's your option.  But there's probably a limit to how far people will go above the appraised value.  This is not a super common example, but common enough.  Sometimes things just get a little complicated.  

All of these things are why I'm here. I'll make sure you know what could happen. I'll make sure you know about the comparables I use when we're coming up with a sale price for your home. You may or may not have an idea of what you want to sell your home for. Either way... we'll talk about all of the variables to come up with one of the best plans for your situation.

If you have other questions about the home selling or home buying process, please let me know. I'm a teacher at heart, and I love to help.  :-)

Tara Christensen
Hegg REALTORS
Sioux Falls, SD
605-376-4933