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.
