One of the reasons that it is so important to price your home correctly is because your buyer may be getting a mortgage and their bank will send an appraiser to put a value on your home to support the amount of the mortgage your buyer is requesting. Even if your buyer is not getting a mortage and is paying cash your buyer may make an appraisal a contingency to the contract to insure they aren’t overpaying.
The appraiser may or may not know the values in your area and it is the listing agent’s job to provide comparable sales and a list of improvements to the appraiser . When a listing agent gives comparables to the appraiser it does not mean that those sales will be used but what it does mean is that the appraiser will review the comparable and make an independent decision as to its’ validity. Appraisals follow certain guidelines and while mostly factual there is room for opinions and adjustments. Appraisals are reviewed by the banks underwriters who may or may not question items in an appraisal. If your agent says the house appraised you need to wait until it goes through underwriting before you can break out the champagne and start packing.
If your house does not appraise you can ask for a review and if there are sales or things in the appraisal that are inaccurate you can use that to support your request for a review but it isn’t often that the appraiser will agree to a review….so what can you do if the house doesn’t appraise?
You can ask the buyer to put more cash into the transaction and make up the difference however while some buyer’s might agree most will feel that if the appraisal says the house is worth such and such that putting additional money in is overpaying;
You can split the difference with the buyer however you need to clear this with the bank as they will have to approve this because there are guidelines on the different mortgage products and it may not be possible for your buyer;
Or you can lower your price so that the property appraises and your buyer can obtain their mortgage.
If you don’t lower your price and your buyer does not have the funds or will not overpay for your house your buyer may move on and you will need to put your property back on the market and sell it again. The next buyer may also have an appraiser come in and you now get an appraisal that is lower than the first appraisal….you learn that you should have lowered your price for the first buyer….
For any seller who thinks they can just put a high price on their home this is why that doesn’t work out so well.