Frequently Asked Questions

What happens if the appraisal comes in below the contract price on the Emerald Coast?

A low appraisal means the lender will only finance based on the appraised value, not the contract price. You have four options: (1) renegotiate the price with the seller down to the appraised value; (2) cover the appraisal gap out of pocket — pay the difference between appraised value and contract price in addition to your down payment; (3) challenge the appraisal by providing additional comparable sales to the appraiser or lender; or (4) exercise your appraisal contingency and exit the contract with your earnest money returned. Which option makes sense depends on how the contract is written, how motivated the seller is, and how much you want the property.

How do appraisers value Gulf-front condos on 30A, Destin, and PCB?

Residential appraisers primarily use the sales comparison approach — they find recent sales of similar units in the same building or comparable buildings and adjust for differences in floor level, view, square footage, condition, and amenities. Rental income is generally not the primary method for a residential condo loan appraisal, though it may be considered as supporting evidence. The challenge on the Panhandle is that the comp pool is often thin, especially for high-floor Gulf-front units. An appraiser unfamiliar with the local market may undervalue a unit by failing to properly adjust for view premiums that local buyers understand well.

What is an appraisal contingency and do I need one?

An appraisal contingency is a contract clause that gives you the right to exit the contract — and recover your earnest money — if the property appraises below the contract price. In Florida, the standard FAR/BAR contract includes an appraisal contingency option, but it must be elected and written correctly. Without it, a low appraisal puts you in a difficult position: you either cover the gap or risk losing your deposit if you walk. On the Panhandle, where beach condos and waterfront properties can be difficult to appraise, I strongly recommend including an appraisal contingency on financed purchases.

Do vacation rental income and Airbnb history affect the appraisal on the Panhandle?

For a standard residential mortgage (conventional, FHA, VA), the appraisal is based on market value using comparable sales — rental income is not the primary driver. However, for investment property loans and DSCR loans, the appraiser may use an income approach that considers the property's rental income potential. In those cases, documented rental history from platforms like Airbnb or VRBO, or a rental income analysis from a local property manager, can support a higher appraised value. The loan type determines which appraisal method applies, so discuss this with your lender before ordering the appraisal.

How are new construction homes appraised on the Florida Panhandle?

New construction appraisals on the Panhandle often use the cost approach — the appraiser estimates the value of the land plus the cost to build the structure, adjusted for depreciation. When comparable sales of similar new construction exist nearby, the sales comparison approach is also used. Builder contracts typically include language stating the purchase price is the appraised value, which can limit your ability to renegotiate if the appraisal comes in low. Review the appraisal provisions in your builder contract carefully before signing — some builders require you to cover any appraisal gap, and that obligation can be significant on a custom build.

What is the difference between appraised value, assessed value, and market value on the Emerald Coast?

These three numbers are often confused but serve different purposes. Appraised value is determined by a licensed appraiser for your lender — it is the value the bank will lend against. Assessed value is set by the county property appraiser for tax purposes and is often lower than market value, especially for non-homestead properties. Market value is what a willing buyer and seller agree to in an arm's-length transaction — it is what you are actually paying. On the Panhandle, assessed values for investment and second-home properties are not capped by the Save Our Homes amendment (which only applies to homestead properties), so they can increase significantly year over year as the market rises.