If the buyer is using a mortgage to buy your home then the lender will require that an appraisal be conducted. So what is an appraisal? Read this blog post to find out!
Who orders the appraisal? The buyer’s mortgage lender orders the appraisal, but the buyer pays for it.
When does the appraisal occur? Usually during week day hours in the first 2 to 3 weeks of being under contract.
Do I need to attend the appraisal? No, you will not attend the appraisal. Instead, we’ll meet the appraiser at your home and walk him/her through the property. We’ll go over the comps and state our case as to why we think the purchase price is justified.
How long does the appraisal take? Usually about 30 minutes.
How long until we know if the property appraised for the purchase price?Usually a week to 10 days after the appraisal appointment. Once the report is written, the buyer’s mortgage lender forwards it to the buyer to let the buyer 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 less than the purchase price, we have a problem. That means the bank will only give the buyer a loan for the appraised value. In this case, the buyer will often come back to us and ask to renegotiate the purchase price down to the appraisal price. If we say no then the buyer has to come up with cash at closing for the difference between the appraisal price and the purchase price and many buyers can’t or won’t want to do that. For instance, if the purchase price is $300K, but the appraisal only came in at $290K and we will only agree to lower the price to $295K then the buyer has to decide if he or she is going to bring an extra $5K on top of the down payment and closing costs to closing or walk away from the deal. If the buyer walks away, his or her earnest money is usually refunded in the case of a low appraisal.
NOTE: If I were the buyer’s agent, I would be advising my client that it is ill advised to overpay from appraisal. With that being said, if I am the buyer’s agent and I also feel that the appraisal does not reflect the value of the home, I work with the listing agent in that case to try to appeal the appraisal. It is VERY rare to get an appraisal amended, but it is possible.
Also, keep in mind that for government-backed loans (FHA, USDA, and VA) the appraisal stays with the home for SIX months. So if you were to not negotiate with say an FHA buyer on an appraisal cut, then relist and go under contract with another FHA buyer, the appraisal will be the same. It is most advantageous to everyone to work together and create a winning scenario.
Questions? Call 717.963.0016 or firstname.lastname@example.org.