Because the appraisal is usually paid for by the Buyer, though it will depend on what was negotiated in your contract, generally we wait until after repairs are agreed upon before directing your lender to order the appraisal. That way you aren’t obligated to this additional cost should major issues come up during the inspection or an agreement on repairs isn’t reached with the Seller.
It usually takes at least a week for the appraiser to visit the property, and then they will submit a report to the lender which includes their estimate of the market value based on factors like comparable properties, some of the home’s features, and the current market conditions. Keep in mind an appraisal is just that one person’s opinion of value and they can tend to be more conservative. Some factors which might add a lot of value to you as a Buyer, particularly views & backyards (pool), don’t add as much value in an appraisers eyes. Once complete, you should receive a copy of the appraisal from your lender.
Per the contract, if the home doesn’t appraise for at least the purchase price the Buyer has an opportunity to cancel the contract within five days and receive a refund of the earnest money. Other options do exist though and can run from the Buyer putting down a larger down payment as necessary or the Seller reducing the purchase price. It’s worth noting that the Seller is not under any obligation to reduce the purchase price. This is a common misconception for some Buyers. However, a Seller will usually weigh the possibility of the same thing happening on a future contract and having to go through the process of showings, inspections, etc. again.
Next: Hire movers and start packing
- Step 1: Find a REALTOR®
- Step 2: Get pre-approved for a mortgage (only applies to buyers who are not paying with cash)
- Step 3: Start your home search online
- Step 4: Time for showings
- Step 5: Make an offer
- Step 6: I have an accepted contract. Now what?
- Step 7: Schedule the home inspections
- Step 8: Drop off your earnest money check
- Step 9: Put the closing on your calendar
- Step 10: What is the inspection period?
- Step 11: Don’t spend extra money (only applies to buyers who are getting a loan)
- Step 12: Provide documents to your loan officer (only applies to buyers who are getting a loan)
- Step 13: Read the title commitment
- Step 14: Review the HOA documents (only applies to buyers who are purchasing homes with HOAs)
- Step 15: Fill out and return your buyer’s packet
- Step 16: Tips for attending the home inspection
- Step 17: Read the inspection reports
- Step 18: Make repair requests
- Step 19: The appraisal (only applies to buyers who are getting a loan)
- Step 20: Hire movers and start packing
- Step 21: Hook up your utilities
- Step 22: Set up homeowner’s insurance
- Step 23: Get your down payment ready
- Step 24: Secure your new home
- Step 25: Do you want a home warranty?
- Step 26: Make your down payment
- Step 27: Attend the walkthrough
- Step 28: Attend the signing
- Step 29: Get the keys
- Step 30: Wrapping things up
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