What can you do if you receive a low appraisal on the house you are buying?

The majority of financing transactions will require that an appraisal be completed before approving the loan.  With the number of cash transactions on the rise, cash buyers may also ask that an appraisal be a contingency to the contract. 

The Florida Realtors® website recently posted an article today titled; Low appraisal killing a deal? Here’s what to do. Keeping in mind that appraisals are designed to make sure the property is worth what the buyer is paying, and having a low appraisal kill a deal is not always going to be a bad thing or should be fought.  The article offers several suggestions including;

• Ask the seller to sell at appraised value. Before you laugh, those of us who have been in the business for anytime at all have asked sellers this very question and for a variety of reasons, sellers have agreed.  
• Find an appraiser closer to home.  Many feel that in order to do an accurate appraisal, you should be familiar with the area, neighborhood, or community.  If the appraiser was from a distant land, the article suggests asking for a different appraiser.
• The article suggests that finding suitable comparable create an appraisal problem.  Foreclosure and short sale transactions are not considered normal and when used to appraise a normal sale, could work to lower value.  My research this afternoon of the Osceola market indicated that 60% of the closed business this year in the County have been "normal" or "traditional" sales.  This fact should help give appraisers in this area, a broad supply to choose from.

None of these suggestions guarantee that the deal will still close when faced with a low appraisal but they do offer a few suggestions that over the years have worked.  If it is a house that the buyer liked enough to offer the price they offered, then with the buyer’s or seller’s written approval, try some of the suggestions out the next time you are faced with a low appraisal.