What can we do when an appraisal comes in low
Heading off a low appraisal is the first step and can save a lot of headaches later.
I believe that as agents we should always communicate in advance with the appraiser and offer to provide our comps to justify a contract price. Part of this communication is treating the appraiser with respect and letting them know we apprecaite them for doing a professional job. Providing a few "good" comps will let the appraiser know we did our job and negoitaited a contract based on logical comparitive analysis. I usually try to provide three SOLD comps. One higher. One close to contarct price and one lower. by "bracketing" the price we can show the appraiser that we did our homework.
When the appraisal comes in low, we should try to renegotaite. If we are only off by a few thousand, perhaps the seller and buyer can meet half way. ( If buyer has extra funds to bring to the table ) Other items may be negoatialble like home warranties and home furnishings that could off set any actual price difference. If the seller is motivated they may just want to reduce the price to the appraised value. The lender also has to be on board with any negotiated new agreement.
There is always the possibility of an appraisal "rebuttal" but unless there is an absolute perfect comp that was missed by the appraiser, this is seldom successful. I find that most appraisers know what they are doing. Ordering a new appraisal with the same lender is also difficult and no guarantee of a better value.
In a rare situation I have had a buyer switch lenders and order a new appraisal which came in at contract price. The buyer, seller and both agents should be on-board with this decision because it will usually require an extension of the close date as well.
A low appraisal is not necessarily the "end' of the deal but it requires dedication, communication and the willingness to negotaite by all parties, to reach a successful conclusion.