Your buyer has found a home they love, their credit is good, the inspection goes well and the closing is scheduled, everything is looking good...Then the appraisal comes in too low and suddenly your deal is dead. Most mortgage loan originators have dealt with this and it is one of the most frustrating things, not only for you but also for the client.

If a buyer has a contract to buy a home at $175,000 and the appraisal comes in at $160,000 the lender is only going to be willing to finance the lower amount, leaving your client to come up with the difference...something that usually does not happen. Banks expect appraisers to account for every decision they make, and often times the appraiser will err on the side of caution and overcompensate. Foreclosures and short sales only complicate the matter further as these will typically sell for 30% or so below their non-distressed counterpart, and appraisers often must use them as comps because no other sold properties exist. And if the home is in a declining market it is even more tricky.

So what can you do? Do you have to just deal with the outcome lose the deal and move on? Not necessarily. If you feel as though there has been an error in calculating the value, and you can substantiate it, then you are allowed to contact the appraiser and state your case as to why you feel like the valuation is wrong and ask for an adjustment. Perhaps the appraiser didn't notice some upgrades or improvements that were made to the home, or maybe one of the comps used was a foreclosure that was badly damaged prior to its sale and was subsequently fixed. If you decide to do this, make sure you approach the appraiser in a polite and professional manner. Do not be angry and/or irrational when asking them to reconsider because they will immediately shut you out and be unwilling to consider what you have to say, no matter how right you may be.

Another possible solution is to ask the seller to make a concession on the price. Often times it is more appealing to the seller to concede some of the price (if possible for them) than to not get the sale at all and then have to put the house back on the market and go through the process all over again.

So if you get a low appraisal on one of your deals don't give up! There are steps you can take to save the deal. And even if it doesn't always come out in your favor at least you did all you could to help your client...and your efforts in their behalf do not go unnoticed.

Travis Torcoletti IKON Financial Group

(803) 381-5149