If you are in the process of purchasing a home with an FHA loan, you may run into the situation where the appraisal comes back lower than the contract price. This can be a frustrating and confusing experience for buyers and sellers alike, but there are a few things you can do to navigate the situation.
First, it is important to understand why an appraisal might come back lower than the contract price. Appraisals are conducted by licensed professionals who use a variety of factors to determine the value of a property. This includes looking at recent sales of comparable homes in the area, as well as considering the condition of the property and any improvements or upgrades that have been made.
If the appraiser determines that the value of the property is lower than the contract price, there are a few options available. One option is to negotiate with the seller to lower the price to match the appraised value. This can be a difficult conversation, but it is often the most straightforward way to move forward.
Another option is to challenge the appraisal. This can be done by providing additional information to the appraiser, such as recent improvements that were not included in the initial appraisal. In some cases, a second appraisal may even be ordered to get a more accurate value of the property.
It is important to remember that any changes to the contract price will need to be approved by the lender, as the loan amount is based on the appraised value of the property. If the contract price is lowered, the loan amount will need to be adjusted accordingly.
If you find yourself in the situation where the appraisal comes back lower than the contract price, it is important to work closely with your real estate agent and lender to find the best solution. While it may be a frustrating setback, there are options available to help you move forward with your home purchase.