When you’re selling a duplex, triplex or fourplex – or even a single-family home – in Silicon Valley, you need to know that the buyer’s lender will require an appraisal. The appraisal is the hinge that can make or break your real estate deal.

What is an Appraisal?

An appraisal is an opinion of value. Typically, lenders send out a licensed appraiser to determine how much a property is worth, whether it’s a duplex, triplex, fourplex or single-family home. The appraiser’s job is to determine exactly how much the home is worth so he or she can tell the lender. The lender then makes its decision based on the appraiser’s professional opinion.

How Can an Appraisal Affect the Sale of Your Duplex, Triplex or Fourplex?

The appraiser’s opinion on how much the property is worth matters… a lot. If the appraiser says the property is worth less than what you’re asking the buyer to pay for it, the lender will decline to give the buyer your asking price. That means the buyer will have to come up with the extra cash on his or her own – or maybe even walk away from the deal.

For example, if you’re selling a duplex for $400,000 and the appraiser tells your buyer’s lender that it’s only worth $350,000, the lender will probably tell the buyer, “Okay, we’ll give you $350,000 for it. If you still want to buy it, you’re going to have to come up with the additional $50,000 on your own.” That puts the buyer (and you) in a tough spot – and you both have decisions to make. You might decide to lower the price to $380,000 if the buyer can only come up with an additional $30,000 – or you might decide to cancel the whole transaction.

Your Options if the Appraisal Comes in Low

If your appraisal comes in low, you have a handful of other options. You can:

  • Meet the buyer part-way
  • Request a copy of the appraisal
  • Ask the buyer to challenge the appraisal
  • Offer seller financing
  • Renegotiate your sales price with the buyer
  • Cancel the whole deal and relist the property
  • Consider another offer