The Appraisal Challenge Nobody Warns You About
You've found the perfect mountain property, negotiated a fair price, and your lender orders the appraisal. Then it comes back $30,000 under contract price. Frustrating, right? This happens more often than you'd think in Colorado's resort towns, and there are specific reasons why.
Why Mountain Appraisals Are Different
Unlike suburban neighborhoods where you can find dozens of similar homes that sold recently, mountain properties are often unique. That 1970s A-frame with the amazing views? There might not be another one like it that's sold in the past year within a reasonable distance.
Appraisers have to use comps—comparable sales—to justify their value opinion. In ski towns, they might need to pull comps from different neighborhoods or even different mountain communities entirely. Some adjustments they make for things like lot size, views, or ski access are somewhat subjective, which can lead to unexpected results.
Seasonal Quirks
Appraisals don't always account well for seasonal demand. A property in Breckenridge might fetch top dollar in November when ski season is ramping up, but the appraiser is required to pull recent comps—which might include summer sales when the market was quieter. This timing mismatch can create artificial gaps.
What Happens If It Appraises Low
You've got a few options. First, you can renegotiate with the seller. If the appraisal is substantially under contract price, many sellers will at least meet you somewhere in the middle.
Second, you can bring more cash to closing to cover the gap. Not ideal, but sometimes it's worth it if you really love the property and believe in its long-term value.
Third, you can walk away. Most purchase contracts include an appraisal contingency that lets you exit the deal if the property doesn't appraise.
Prevention Strategies
Work with an agent who knows the local market inside and out. They should be able to pull comps before you make an offer and give you a realistic sense of where the appraisal is likely to land.
If you're buying something truly unique—a custom mountain modern home, for instance—consider adding an appraisal contingency with a dollar threshold. For example, you'll proceed if it appraises within $20,000 of contract price, giving both you and the seller some clarity on expectations.
Also, ask your agent to prepare a comprehensive list of recent sales and property features for the appraiser. While appraisers can't accept "coaching," they do appreciate relevant information that helps them do their job accurately.
Questions about how appraisals work in your target area? Reach out—we deal with these situations regularly and can share what we've learned.
