In different parts of the country, many people are starting to experience something that wasn’t all that common before just recently — the appraisal is coming in below the contracted purchase price that was agreed on by buyer and seller.

The reasons for this happening could include any number of things including the new HVCC laws, but because it isn’t just happening to a few people, I thought it might be good to spread the word about what your options are if you find yourself in this boat.

If you are selling your home and the appraisal comes in below contract sales price, you are not going to be very happy about it usually. Your options include:

• Lowering the sales price to the appraised value
• Talking the buyer into coming into close with more cash
• Canceling the deal and hope to find another buyer soon
• Getting another appraisal done and hope for a higher sales price

If you are buying a home and the appraisal comes in low, this is good news! Your options include:

• Getting your agent to negotiate the new sales price to be the appraised value
• Getting another appraisal done and hope it doesn’t come in at contract price
• Backing out of the deal and hope to find another home
• Bringing in more cash required to close

What is the most common solution that I personally see when an appraisal initially comes in below is sales price is that the seller reduces the sales price to be the appraised value. The second-most common thing I see is that the deal falls apart completely.

But no matter what you are able to negotiate and whether you are the buyer or the seller in the transaction – when you agree on a sales price and then the appraisal comes in low… anything can happen.