May 11, 2021
In a seller’s market, comparable sales and competition can drive up a home’s price. This is especially true in a seller’s market where offers from multiple buyers try to outbid each other. And, while this sounds like a fantastic deal for the seller, a low appraisal can kill the deal.
Many variables affect appraised values. Some of these include artificially inflated prices from seasonal activity, rising market values, foreclosures or short sales among the comparable properties, increased or decreased supply and demand, overlooked pending sales data, mistakes made by or inexperience of the evaluators, etc.
A well-written contract requires the seller to release back to the buyer any earnest money deposited at the time of the contract. You can then put your home back on the market. As long as the appraisal was not for an FHA loan, you can hope for a better appraisal next time. FHA loans connect appraisals to the property, so any new FHA buyer would end up with the same appraisal as the first buyer.
The best way to avoid this is to follow your professional real estate agent’s advice when setting your home’s price. They follow the market trends, know the neighborhood, and have the pulse of what the market can bear.
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