Up Your Appraisal IQ: Part 2

Last week, we discussed the difference between market value and appraised value, and the reasons behind discrepancies between the two. This week, we will tackle that situation where the appraised value comes in short of (is lower than) the agreed-upon sales price — the market value. While we know this is not an ideal situation — current market conditions, such as low inventory and high buyer demand, likely lead to this outcome at some point for your buyer or seller. Let’s discuss the available options:

1. You can renegotiate the purchase price.

Often, buyers structure their loans to either put down a specific downpayment or a percentage of the purchase price, which is how the loan-to-value ratio is calculated. The lender will be able to recalculate the new loan to value off of the appraised value vs. the sales price and offer alternative financing options to the client.

Your Key Mortgage loan officer is educated on all of your options and is here to help. If you want to know how to incorporate these discussions into your consultations, reach out to your Key Mortgage loan officer.