A home appraisal can confirm the property’s value, create equity, or lead to challenging negotiations.
When buying or selling a home, one step often raises the most questions: the appraisal. If you've ever wondered what happens if your home doesn't appraise at value, we'll explain the process to you and show you the options both sides have to move forward.
What is a home appraisal? An appraisal is required any time a property is financed, whether through a conventional, FHA, or VA loan. Once the contract is signed, the lender orders the appraisal. Neither the buyer, seller, nor broker chooses the appraiser; it’s assigned independently to keep the process fair.
How does it work? The appraiser schedules a visit to the property. Their role is objective, but preparation can help the process go smoothly.
On our team, we meet the appraiser at the property or connect with them ahead of time. We provide documents like the purchase agreement, floor plan, survey, and a list of recent updates or upgrades. This ensures the appraiser has the full picture when determining value.
What happens when the appraisal comes back? There are three outcomes:
1. At value. The appraisal matches the contract price. This keeps the deal moving forward.
2. Above value. The appraisal comes in higher than the contract price. The buyer instantly gains equity, which is a great way to start homeownership.
3. Below value. The appraisal is lower than the agreed price. This is where negotiations begin.
"The best way to avoid appraisal issues is to price your home according to recent sales and market conditions."
What to do when the appraisal is low? When a home appraises below its value, buyers and sellers usually have three to five days to reach an agreement. Sometimes the seller lowers the price. Other times, both parties compromise.
For example, we recently had a property on the Northwest side that appraised $30,000 below the list price. The seller reduced the price slightly, the buyer brought in additional funds, and the seller also provided credits and repairs. In the end, both sides were satisfied, and the deal closed.
How to avoid appraisal issues. Meeting the appraiser and preparing documents helps, but the best prevention happens earlier: pricing the home correctly.
We guide sellers to list based on recent comparable sales and current market conditions. Overpricing increases the risk of a low appraisal, which makes negotiations more challenging for everyone.
The market has shifted, and buyers are paying close attention to condition and value. Pricing strategically helps prevent setbacks and keeps the transaction moving smoothly.
If you have questions about appraisals or want guidance on pricing your home, we’d love to help. Contact us at 505-620-2549 or sahar@nmhomedeals.com . We’ll walk you through the process and help you feel confident in your next move.