When your home appraisal comes in below the purchase price, you can challenge it with comparable sales data or renegotiate the deal. The appraisal affects your down payment and earnest money, and outcomes depend on what the buyer and seller agree to.
It's not something we ever want to have happen. But the reality is appraisals occasionally come in low. And I know that can create some stress. But rest assured, there are some steps and processes to try to make things right and corrected. Very first step is the agents get together. Generally it's on the listing or selling side to provide comps or comparable homes. These are other similar size, similar type homes that have sold recently that would support a higher value. They double check what the appraiser used for their comps and they might add in some more comps that would help support a better value. You get one rebuttal if the appraisal company agrees. Oh, yep, we missed one. We should increase the value. That's great. That could fix it. If not, then it's kind of back to negotiations. The sellers oftentimes may have to drop their price down to the appraisal value. Or maybe a combination of the sellers dropping the price and the buyers may be covering a little bit of the difference. Because the important thing to know is the down payment now is based on the lower of the appraisal or purchase price. In this instance, it'd be the appraisal value. So now there's this gap above that that has to be covered by buyer or seller to make the work. Or if worse comes to worse, we don't want it to happen. But you can back out of the deal and get reimbursed your earnest money.
