What Happens if an Appraisal Comes in Lower than Sales Price?

Why does it matter if my appraisal comes in lower than the sales price of the home I am Buying or Selling?

The simple answer is this: A bank will not loan the full amount on a home that appraises less than the purchase price.

So what happens next? This is when the buyer and seller must negotiate. A seller will often take a lower purchase price to match the appraised price but this is not part of the contract. A seller might refuse to lower the price and the buyer then must come up with extra cash to pay the difference. If this happens, it often means that the buyer can no longer purchase the home. Sometimes a seller might lower the price but then reduce the amount of seller paid closing costs that are paid by the seller.

There are many different options if the home does not appraise for purchase price. Your realtor and loan professional will walk through the options with you. But remember, pricing your home correctly when listing , or paying market value when purchasing is the best way to avoid this situation all together.

A Back-up Sump Pump Just Might Save the Day!

Ever worry about what would happen if your sump pump quits working and you aren’t home? If you your sump pump goes out it can flood your home very quickly. A sump pump can break or quite often doesn’t work when the electricity goes out.

I recently had a water backup system installed at my home. This system requires no electricity and uses water pressure to discharge water from the sump pump once the level reaches a float within the sump. For more information on how this system works refer to the link below.

Another option is to use a batter backup system to power the sump pump if the electricity fails. This system does require checking the batter to make sure it is charged and operational. It is easy to forget to check it and if the battery goes bad then the sump pump will not work if the electricity goes out.

A plumber is the best option to install a sump pump back up system The plumber I used in Wichita, KS is The Plumbing Doctor 316-733-0525.

Why Does an Appraisal Matter?

An appraisal is a very important part of the loan process when applying for a loan. Simply stated, a bank or loan company will not loan more than the appraisal value of a home. Once a purchase contract is negotiated and the bank has approved the buyer, an appraiser will be sent out to assess the value of the home. This is an approximate $500 charge that the bank or loan company will charge the buyer.

The appraiser will walk through the home and notate all of the features of the home along with taking square footage measurements. Then the appraiser will search the MLS for similar homes that have sold over the last 6 months to a year and compare the value of those homes. The appraiser is extremely skilled at comparing homes and coming up with a value. This value is the appraiser’s educated opinion of what the fair market value of the home.

This is why Realtors also use the MLS to find similar comparable properties in order to price a home to list on the market. Home sales do not work like car sales where they are priced high in order to negotiate a lower price. Realtors know that a home must appraise for the contract price so they try to find a fair market value for the home.