Getting a low appraisal can feel like a punch to the gut, especially when you have already fallen in love with an Oahu home. But a low appraisal does not have to be a deal breaker. Understanding your options can help you navigate this common real estate hurdle and still close on your dream property.

A home appraisal is an independent assessment of a property's market value, required by lenders to ensure they are not lending more than the home is worth. In Hawaii's dynamic real estate market, where prices can fluctuate based on location, views, and unique property features, appraisals sometimes come in lower than the agreed-upon purchase price.

Option one is to negotiate with the seller to lower the purchase price. If the appraisal comes in below your offer, you have solid evidence that the home may be overpriced. Present the appraisal findings to the seller and request a price reduction to match the appraised value. In many cases, sellers will agree to some adjustment rather than risk losing the deal entirely.

Option two is to make up the difference with additional cash. If you have the financial means and believe the home is worth the agreed price despite the lower appraisal, you can bring additional cash to closing to cover the gap between the appraised value and the purchase price. This is common in competitive markets where buyers are willing to pay a premium for the right property.

Option three is to challenge the appraisal. If you believe the appraiser missed important comparable sales or unique features of the property, you can request a reconsideration of value through your lender. Provide additional comparable sales data, information about recent upgrades, or details about the property that may not have been adequately considered. Your real estate agent can be invaluable in compiling this supporting documentation.

There is also a fourth option that many buyers overlook: a combination approach. You might negotiate a partial price reduction with the seller while also bringing some additional cash to the table. This compromise can satisfy both parties and keep the transaction moving forward.

To protect yourself from low appraisal surprises in Hawaii, consider including an appraisal contingency in your purchase contract. This gives you the right to renegotiate or walk away if the appraisal comes in low, without losing your earnest money deposit. Your agent can help you structure this protection.

Working with an experienced Oahu real estate agent who understands local property values can also help prevent low appraisal situations. A knowledgeable agent will help you make offers that are competitive yet realistic based on comparable sales data.

At Kristy and Austin Home Group, we have extensive experience navigating appraisal challenges in the Oahu market. We know how to prepare strong offers, provide supporting documentation for appraisers, and negotiate effectively when appraisals come in low. Contact us today for expert guidance on your Oahu home purchase.