What Happens if a New Construction Home Doesn’t Appraise?
Purchasing a new construction home can be an exciting and rewarding experience. However, there are instances where the appraisal of a new construction home falls short of the agreed-upon purchase price. So, what happens if a new construction home doesn’t appraise?
When a new construction home doesn’t appraise, it can have several consequences for both the buyer and the seller. Firstly, the buyer may need to come up with additional funds to cover the discrepancy between the appraised value and the purchase price. This can lead to financial strain for the buyer, as they may need to secure additional financing or negotiate with the seller for a lower price. Alternatively, the seller may choose to lower the price of the home to match the appraised value.
In some cases, if the buyer cannot secure additional funding or negotiate a lower price, the sale may fall through entirely. This can be incredibly disappointing for both parties involved, as the buyer may have already invested time, effort, and money into the purchase process.
Frequently Asked Questions:
1. What factors can cause a new construction home to not appraise?
– Factors such as inaccurate pricing, market fluctuations, or overvaluation can lead to a home not appraising at the desired price.
2. Who pays for the appraisal?
– Typically, the buyer pays for the appraisal as part of the closing costs.
3. Can the appraisal be contested?
– Yes, the buyer can request a reassessment or provide additional information to support a higher appraisal value.
4. Can the seller lower the purchase price if the home doesn’t appraise?
– Yes, the seller has the option to lower the price to match the appraised value.
5. Can the buyer walk away from the purchase if the home doesn’t appraise?
– Yes, if the buyer cannot secure additional funding or negotiate a lower price, they may choose to terminate the purchase agreement.
6. Can the buyer negotiate with the builder if the home doesn’t appraise?
– Yes, the buyer can negotiate with the builder for a lower price or additional incentives to make up for the appraisal shortfall.
7. Is it possible to get a second appraisal?
– Yes, the buyer or seller may opt for a second appraisal if they believe the initial appraisal was inaccurate. However, this is at their own expense.