What should we do in case if the appraisal value of the property is lower than the purchase price in Canada?
If the appraisal value of a property is lower than the purchase price, the buyer and seller may need to renegotiate the purchase price. The buyer may purchase the property at the lower appraised value, or they may be able to negotiate a different purchase price with the seller. The final decision will depend on the specific situation and both parties’ agreement.
Top 5 reasons for low appraisal value
1. Poor condition of the property: The state of a property can greatly affect the appraisal value. The appraisal value may be lower if a property needs repairs or updates.
2. Location: The location of a property can also affect the appraisal value. A property in a less desirable neighbourhood or a rural area may be appraised at a lower value.
3. Recent market trends: Market trends can also affect the appraisal value of a property. If the market is declining, the appraisal value may be lower.
4. Market competition: The amount of competition in the market can also affect the appraisal value. If there are a lot of similar properties on the market, the appraisal value may be lower.
5. Poor comps: It is important to select comparable properties similar to appraised ones. The appraisal value may be lower if the comps do not reflect the appraised property.
How to deal with low appraisal – top 10 tips
1. Review the Appraisal Report: Review the appraisal report and make sure you understand the appraisal process.
2. Request a Re-Appraisal: Request a re-appraisal if you disagree with the results of the first appraisal.
3. Negotiate with the Seller: Negotiate with the seller to agree on the purchase price.
4. Consider Making Repairs: Consider making repairs or updates to the property to increase the appraisal value.
5. Find Recent Comparable Properties: Find recent comparable properties in the area to use as comps.
6. Get a Second Opinion: Get a second opinion from another appraiser.
7. Consider Other Options: Consider options like a bridge loan or a short sale.
8. Review the Appraiser’s Credentials: Review the appraiser’s credentials and ensure they are qualified.
9. Ask for an Explanation: Ask the appraiser for an explanation as to why the appraisal value is lower than the purchase price.
10. Consult with a Real Estate Professional: Consult with a real estate professional to help you navigate the process.