Options when a bank downvalues a property

03 November, 2022

The housing market is always changing. Recently, we've seen a shift where banks are now downvaluing properties that they have previously assessed as being worth more. This can be a big problem for homeowners who are trying to sell their home, or for buyers who are looking to purchase one. In this blog post, we'll take a look at the options that are available to both buyers and sellers in this type of situation.

For sellers, the most obvious option is to lower the asking price of the property to match the new appraised value. This may not be desirable, as it means accepting less money for the home than what was originally expected. However, it may be the best option to sell the property promptly. If a seller is not willing to lower the asking price, they may have to wait longer to find a buyer who is willing to pay a higher amount. If a sale is in progress it can mean time wasted if an agreement is not met as well as a loss of costs for any fees paid.

For buyers, there are a few options available. One is to negotiate with the seller to see if they are willing to lower the price of the home. This may be successful if the seller is motivated to sell quickly. Another option is to look for another property that has been similarly downvalued by a bank. This may be a good opportunity to purchase a property at a lower price than what was originally budgeted for.

Banks are a lot more risk-averse with their mortgage rates and valuations so they might not give a full mortgage for an asking price which means something has to budge. With time property prices are changing and whilst this can be beneficial in an upward market it can cost more in a downward spiral so you'll need to look at the risk of walking away with any drops in prices. Remember it won't just be one property dropping, the whole market will be following so a percentage difference is relevant to where you might be looking to move to.

Whether you're a buyer or seller, it's important to be aware of the options that are available when a bank downvalues a property. With some careful planning and negotiation, it is still possible to purchase or sell a home in this type of market.