Richmond VA Real Estate Q & A: What Happens if the Home I am Buying Doesn’t Appraise?
As your Richmond VA real estate agent, it is my job to interpret the Richmond VA real estate market and provide what I think is the fair market value of a home. Based upon this, and your desire for a particular home, you will make an offer to the seller. Once under contract, your lender will send a certified appraiser to make their recommendations on value. So, what happens if the home you are buying doesn’t appraise to the sales price you negotiated to purchase?
The Central Virginia Regional Multiple Listing Service contract states that you have three options in this scenario. First, you may ask the seller to reduce the purchase price to the appraised value. For example, if you contracted to pay $400K and the appraisal comes in at $395K, you may ask the seller to lower the sales price to $395K. Your lender will not be willing to provide a loan on what is essentially an overpriced house. Your second option is to proceed with the sale, however you have to make up the difference in appraised value vs the contracted sales price. In the example above, you would bring an extra $5K to the closing table. Your third option is to terminate the contract should the seller be unwilling to reduce the purchase price and you can not, or will not, bring the additional money to closing.
Which option is best for you when the home you are buying doesn’t appraise? That depends. If you do not have any additional funds to bring to the closing table, then asking the seller to reduce to the appraised value is your best shot in obtaining the home of your choice. If they are unwilling to do so, then you can terminate the contract. If you do have the funds yet don’t have the motivation to over-pay for the home, then your options are the same as above. Now, if you love the home and really don’t want to lose it and can make up the difference in the purchase price vs. the appraised value, then you may want to seriously consider making up the difference.
The best advice I can give a Richmond VA home buyer is to completely understand your motivation for the home you are contracted to purchase. Have you been searching for months on end and have finally found the house you will call home? Do you simply want to purchase the home as an investment? These are all things to consider as you make an offer and are waiting for the appraisal to come back.
Luckily, I have had very few appraisal issues to date. That is why it is so important to hire a Richmond VA Realtor who knows and understands the complexities of the real estate market in which you are navigating. Want to learn more? Contact me, Shannon Milligan with Keller Williams Realty Richmond West, today!
6600 West Broad Street Richmond, VA, 23230 USA
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