What Happens if the Albuquerque Home I’m Buying Doesn’t Appraise?

“What Happens if the Home I’m Buying Doesn’t Appraise?” is the next video series for Home Buyers. In this video, I talk about something that has been happening more often lately as the market has picked up.

“In today’s changing real estate market, with home prices on the rise, there’s more concern than ever with appraisals. As a home buyer, you don’t need to be too concerned however, because the appraisal process is there to protect you. If the house you’re trying to buy doesn’t appraise, one of two things can happen: you can elect to pay the original sales price and bring the difference in cash to the closing table, or you can try and renegotiate with the seller to get them to come down to appraised value. If you can’t work it out with the seller, you have grounds to terminate the contract, and you’re entitled to get your earnest money back. In reality, what usually happens is the seller bites the bullet, reduces to appraised value, and you continue moving towards closing. It’s really in the seller’s best interest, because otherwise, they’re going to have to put the house back on the market, and they’re probably going to have to go through the whole thing again, with another appraisal that doesn’t come in for value, or face the fact they are just not going to be able to sell for what they want to.

So when it comes to appraisal time, try not to get too stressed out, remember the appraisal is there to protect you. And if it doesn’t come in for value, it can actually save you money.”

Thank you for watching my home buyer video. Please visit my YouTube channel for more Home Buyer FAQ’s.

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Comments

  1. says

    Great explanation of what really happens around appraisals. The important thing for buyers and buyer agents to remember is to have an appraisal contingency or a mortgage contingency, with the mortgage pre-approval stating an appraisal contingency. If the buyer has neither, an appraisal below value may risk the deposit.

    • says

      Thanks Ruth. You make a great point about including an appraisal contingency. That was assumed in my Vlog post because here in New Mexico there is an appraisal contingency included in our RANM (Real Estate Association on New Mexico) purchase agreement. So there is always an appraisal contingency with very clear language that states the contract will terminate unless the buyer chooses to go forward and bring the cash to closing or that the parties may negotiate. In comparison to others states it seems like our purchase agreement is more detailed. It’s 12 pages long.

      I just re read yoru comment and we have the mortgage contingency in our boiler plate contract too.

      It’s always interesting to learn about how things are done in different states.

  2. Alden says

    I’m in a different situation, the lender won’t approve my loan because they can’t find comparisons to the home I’m buying in the area around it. It’s a manufactured home in the city, so they can’t find any sold within the last 6mo to an year. Is there a loop hole to this situation?

    • says

      Alden, well, I’m a real estate agent, not an appraiser, but my understanding is that they can extend their search for comps out further (in distance), but I suppose if they have to go too far that the appraisal could still get rejected by the underwriter. Manufactured home financing can be challenging, I’m sorry you are having problems.

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