If you’ve gotten this far it means you’re under contract and you have successfully negotiated the home inspection contingency!!
…Now it’s time for the appraisal
What is the appraisal?
According to the National Association of REALTORS (NAR), “an appraisal is an opinion of value used for real-estate-related financial transactions. Appraisals are required by a state licensed or certified appraiser for most transactions above $250,000. An appraiser’s report will typically include the type of property inspection, approaches to value required, and any lender-specific requirements.” For more details, head over to the Appraisal & Valuation page at NAR.realtor
Who orders the appraisal?
Your mortgage lender or loan officer orders the appraisal.
Tips about the appraisal:
- You are not required to attend
- It generally takes about a week or so after the appraisal is done on-site before report is ready
- Once the report is written, it’s emailed to your mortgage lender. Your mortgage lender will then make it available to you and let you know whether the property appraised at the purchase price, below the purchase price, or above the purchase price.
- If the property appraised at the purchase price, nothing further needs to be done and the closing process will proceed forward as planned.
- If the property appraised for more than the purchase price, congratulations! That means we got you a great deal and you’ll have instant equity in your home on the day you move in!
- If the property appraised for less than the purchase price, we have a problem. That means the bank will only give you a loan for the appraised value. In this case, we then go back and renegotiate the purchase price down with the sellers, ideally to the appraisal price. If they won’t come down to the appraisal price, then you can choose to either walk away or bring the additional funds to closing. For instance, if the purchase price is $500K, but the appraisal only came in at $475K and the sellers won’t go any lower than $480K you have to decide if you’re going to bring an extra $5K on top of your down payment and closing costs to closing or walk away from the deal.