My Home Was Appraised Under Value. Now What?

Here are 5 things to keep in mind when buying a home that is appraised under value!


1. The Bank Will Only Finance Up to Appraisal Value

If you’re seeking to purchase a home and require financing, the bank will only provide you with a loan up to the appraisal value. So, if the asking price is $300,000 but the value comes in at $250,000 – you’re only getting a $250,000 loan. Keep this in mind!

2. Make Sure You Have an Appraisal Contingency in Place

One of the best ways to avoid appraisal related issues is to include an appraisal contingency in your offer. This ensures that you don’t become responsible for an overpriced or undervalued home, and lets you off the hook in the case of a low appraisal.

3. You Have 3 Options: Cancel the Contract, Reduce the Price, or Split the Cost

When the appraised value is less than the asking price, you have several options. You can cancel the contract entirely. If you have an appraisal contingency, you will get your earnest money back. If not, you won’t.  

You can also ask the seller to reduce the price based on the appraisal value. You may get lucky, since they will have trouble selling the home above it’s value in the future. 

The third option is to split the difference with the seller. This is a fair middle ground, where you both help to cover the difference between the cost and value.

4. No Contingency Options

If you don’t have an appraisal contingency in place, you have committed to buy the home regardless of the appraised value. You have to come up with the extra funds in cash, since the bank will not provide it. If you cancel the contract, you will lose all your earnest money.

5. Get Assistance with No Interest

If you’re committed to buying the home but need help covering the difference between the appraised value and the cost, another great option is to work with an investor like Home.LLC, who can provide debt-free assistance to help you buy your home. 

The good news is, appraisals under value are a lot less common in the buying process than they are in the refinancing process. 

If you’re seeking to refinance, your best bet is to work hard to improve your home before the appraisal, rather than deal with this issue afterwards. For more home buying and home owner tips visit!

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