The Lawhead Team would like to share an article from about receiving a low appraisal.

We recently came across the article “How To Handle A Low Appraisal” from Michelle Lerner at Please take a moment to check it out:

Question: If the appraisal comes back lower than the agreed price on a purchase agreement, can I renegotiate the closing fees?

Answer: Appraisals are a touchy subject for many real estate professionals and there’s no question there have been more complaints about appraisals coming in too low during the years since the housing crisis. A couple of years ago appraisers were contending with few recent sales to compare, along with the issue of how to handle distressed sales. Now that home prices are rising again it can also be tough for an appraiser to measure just how high values have reached. Compounding the problem, new appraisal rules introduced a few years ago mean that some appraisers are working in communities where they’re unfamiliar with things that add to a home’s value, such as the school district, proximity to amenities or even lot sizes.

All of that explains why it’s possible that an appraisal could be lower than the price you offered the seller. The way you and the seller and your lender handle a low appraisal depends a lot on the purchase agreement you both signed.

Closing Costs and Appraisals

Your lender cannot finance your property for more than the appraised value, so any renegotiation would have to take place between you and the seller. Your closing costs will be explained to you by your lender on a Good Faith Estimate and then will appear on the HUD-1 statement at the settlement. While some closing costs are non-negotiable, such as tax payments on your transaction, you can ask your lender if you can negotiate the fees charged by your lender. You can also shop for title services and negotiate some of the fees charged by the title company. However, these fees are generally not driven by the price of your home so a low appraisal isn’t likely to impact your ability to negotiate.

appraisalYour contract and your Realtor can guide you to decide how to handle a low appraisal. Your choices include:

Before you commit to buying a house for more than its appraised value, consult with your Realtor and think carefully about the risk you incur by purchasing a property with less equity than expected. If the appraiser is correct, it could take longer than you think to build equity in your new home.

Read the entire article on “What If Your Appraisal Comes In Too Low?