Appraisal Came in Low. Now What?

[Demetrius Lindsey]

Hello BP, 

The wife and I are buying a lovely triplex to house hack. The appraisal came back $50k less than the purchase price. We want the house but don't want to overpay for the property. Our options are 1. Walk away 2. Come up with the difference (Not happening) 3. Hire a new appraiser and see what they come back with. 

Curious to know what anyone else has done or some advice. 

[Bill B.]

You don't have to buy, they don't have to sell. What if the appraisal had come in $50k over your buying price? Would you have paid more or let the seller cancel? I understand you're saying the appraiser is way smarter than you in this case, (you're saying he knows the value but you're a newb that was willing to overpay.) but what if he's not? Maybe they don't do MFR, or not very often?

If it’s worth what you offered, find a way to pay it, you were obviously willing to pay it yesterday, and if the appraisal had come in you would have been happy to pay it. Now a stranger says it’s not worth it and you assume they know better. What if they said it was worth $200k less? You woulda said “Well, obviously this guy doesn’t know what he’s talking about.” But at $50k you assume he does. 

You can offer the same amount and come out of pocket, offer a compromise somewhere in the middle, or offer the appraised value if you don’t care if you get the deal. Happens every day. You’ll get your earnest money back assuming you’re realtor checked the appraisal/financing contingency.