Three Proven Ways to Solve Appraisal Problems

Appraisals are often one of the biggest hurdles to reaching the closing table.

Sometimes, it's a low valuation that throws everything off. Other times, the property needs repairs before the lender will move forward.

Either way, an unexpected appraisal result can feel like hitting a wall, especially when it's the last hurdle before closing.

But this isn't where the deal has to die. With the right strategies, you can keep things moving.

In this article, I'll break down the tactics you can use to get past a bad appraisal and still make it to closing.

Let's get into the details.

Strategy 1: Escrow Holdback

An escrow holdback keeps a deal on track when repairs threaten to delay closing.

In this strategy, the seller sets aside a portion of the sale proceeds in an escrow account to cover the cost of necessary repairs required to meet the appraisal guidelines.

This allows the buyer to move forward without waiting for the work to be completed.

For this approach to work, both parties must agree on the specific repairs, the timeline for completion, and how the work will be verified.

Lenders typically require repairs to be finished within a set timeframe after closing.

Missing this deadline could result in withheld funds or, in extreme cases, the lender deeming the loan non-compliant.

Unfinished repairs may also impact the buyer's future plans, making refinancing or selling the property more difficult if the home fails to meet lending or market standards.

Strategy 2: Rebutting the Appraisal

When a low appraisal puts a deal at risk, rebutting the valuation can provide a path forward.

This strategy works best when the appraiser overlooked recent sales, used outdated comps, or included errors in the report, such as incorrect square footage or missed upgrades.

Start by carefully reviewing the appraisal report for inaccuracies or gaps.

Identify stronger comparable sales within the same neighborhood or market area, focusing on recent transactions involving properties with similar features, sizes, and conditions.

Provide this evidence to your mortgage broker, who will submit it to the lender.

The lender may request that the appraiser reconsider the value or, in some cases, order a second opinion.

While a successful rebuttal isn't guaranteed, a well-documented case significantly improves the chances of closing the deal at the agreed price.

Strategy 3: Offering Seller Concessions

Seller concessions can bridge the financial gap when a low appraisal threatens to derail a deal.

This strategy is particularly effective when buyers lack the cash to cover the appraisal shortfall and closing costs.

For example, the buyer might feel stretched if the appraisal comes in $10,000 below the purchase price.

In this scenario, the seller can offer a concession to cover a portion of the closing costs.

This frees up the buyer's funds to address the appraisal gap, creating a win-win outcome that keeps the transaction moving forward.

To ensure concessions are effective, coordinate with the lender to confirm they comply with loan guidelines.

Most lenders cap seller concessions at 6% of the purchase price.

Appraisals can shake the confidence of everyone involved in a deal.

Buyers worry they're making a bad investment, sellers fear losing their sale, and agents often feel the weight of avoiding the fallout.

These moments test your ability to problem-solve and advocate, but more importantly, they build trust.

You prove you're willing to go the extra mile when you step in with solutions.

Your clients walk away not just with a closed deal but with the confidence that they had someone in their corner who cared about their success that they can refer to all their friends.