Welcome to my Salt Lake City real estate blog. Today’s blog is for hopeful Anytown home buyers who are derailed by a lower-than-expected appraisal. We sometimes think of a real estate transaction as an agreement between two parties – the buyer and the seller. In actuality, there is a third player, the mortgage lender.
When an appraisal arrives that is lower than the price previously established by the parties, troubles can arise. Most Salt Lake City mortgage lenders won’t lend any more than 80% of the ‘fair market value,’ mainly determined by the appraisal. If a buyer was planning on borrowing 80% of a previously agreed upon price, a low appraisal can nix the deal. Bottom line, you might not get your loan approval. What do you do when the appraisal is too low?
Appraising homes in Salt Lake City is not an exact science. If a home buyer in Anytown believes an appraisal is legitimately low, they can appeal it and request another appraisal. Reasons for low appraisals include actual mistakes in the basics: square footage, number of bedrooms, listing of construction materials.
While appraisers usually get the particulars right (it’s their job, after all), there are instances where a local Salt Lake City appraiser fails to list a second garage or bathroom. Basic mistakes are the easiest to justify in an appeal.
The traditional practice of using comparables to determine value can prevent the appraisal from reflecting the true market value. For example, if a home is located on the border between two Salt Lake City neighborhoods with significantly different average home values, an appraisal that only considers comps on the lower-value side do not show a true picture.
If you are looking for deals on Anytown real estate, I invite you to give me a call. I am a professional Utah real estate agent and represent both buyers and sellers in the Anytown, Salt Lake City, Provo, St. George, and Ogden areas. You can reach me at 801.938.3466.