How Do Buyers & Sellers Avoid Low Appraisals?

Here’s how to avoid a low appraisal in this strong seller’s market.

As prices have continued to escalate in our market, we are starting to see appraisals come in below contract price—in some cases, far below. There are a number of factors influencing today's property values, so how can you avoid a low appraisal jeopardizing your transaction?

When my team and I work with sellers, we always advise them to price their homes properly within the market. Sometimes you hear people advise others to price their homes below market value in order to attract multiple offers, but multiple-offer situations are oftentimes happening organically in our market, so there’s no need to do this and I would discourage you from trying it. 

On the other hand, pricing a home high is something we’re seeing happen more often. Sellers figure that someone will definitely want to pay their price because they want their house. Maybe, but it doesn’t always work out that way. That’s why, again, we tell folks to price their homes in the market and let multiple offers come organically (if they do come). That way, when the appraisal comes back, you stand a much better chance of coming in at the contract price and getting the best price for your listing. 

What if you’re on the buying side? Right now we’re seeing a lot of emotional buying due to so many people feeling like they’ve missed out on previous opportunities. If you’re one of these people, don’t try to overcome this feeling by overpaying for a house—make the best offer you can under the circumstances. Remember, if you have a loan, an appraisal still needs to be done for the house you want. If the appraisal comes in low, there is no guarantee that the seller will come down in price to the appraised value. They may just let the deal fall apart, and by that time, you may have already paid for inspections, title work, etc. We do not want to see you losing money on a deal if the contract goes south. 

At the end of the day, whether you are a buyer or seller, the goal of each transaction is for the home to be sold, and that’s what we at The Upstate Home Team want to help you with. If you are ready to buy or sell in this market or have any questions I can answer, don’t hesitate to reach out to me. I’d love to hear from you.