Don't let an appraisal stymie your home sale (© Jeffrey Coolidge/Getty Images)

© Jeffrey Coolidge/Getty Images

I am selling my home and buying another. Purchase agreements have been hammered out, inspections have been done and issues that were uncovered are being addressed, and the closing date has been set. There's just one last hurdle we have to clear before I'm ready to say with certainty that we are moving: the appraisal.

Over the past three months, real-estate appraisals have held back more than one-third of home sales, according to a survey by the National Association of Realtors. Of the real-estate agents surveyed, 9% said a contract was delayed because an appraisal came in below the negotiated price, 15% said a contract was renegotiated to a lower price, and 11% said a contract was canceled as a result of a low valuation. (Bing: How long does the average closing take?)

A low valuation can scuttle a deal if the buyers are relying on financing from a bank to purchase a home. Banks require appraisals to verify that a home's sale price is supported by its market value and won't issue a loan for more than the appraised value. However, there are several things buyers and sellers can do if an appraisal is lower than the price they agreed on, says Walter Molony, a spokesman for the National Association of Realtors. "You don't have to sit there and silently take what happens," he says.

Sellers can:

Look for errors in the appraisal report that might have led to a low valuation. Make sure the appraiser recorded the correct square footage of the property, the right number of rooms and any upgrades that might boost the value of your home.

Ask the appraiser to reconsider his or her evaluation if you think it does not accurately reflect the value of your property. For example, the appraiser might have used short sales and foreclosures when making comparisons for valuation purposes, and the low prices of these properties could have hurt your home's appraisal.

Article continues below


Ask for a second appraisal, especially if the first one was done by an out-of-town appraiser who wasn't familiar with the market.

Pay for your own appraisal and, if the valuation is higher, use it to contest the first appraisal. To find a certified appraiser, visit the Appraisal Institute's website.

Buyers can:

Try to renegotiate the price if you don't have the cash to cover the difference between what the bank is willing to lend and the negotiated price.

Ask for another appraisal if the seller won't agree to a lower price. Ask the new appraiser not to include any foreclosures or short sales in his list of comparable properties.

Cancel the contract if it was contingent upon your ability to secure a mortgage and if you aren't able to get a mortgage for the agreed-upon percentage of the purchase price because of the low valuation.