Once we are through the inspection contingency period, an appraisal will take place if you aren’t paying cash for the property. An appraisal provides a guarantee to the bank that the property you are purchasing has value and is worth what you are paying for it. Appraisals are ordered independently by the state and assigned a random appraiser. An appraiser will visit the property and look at the same things that we did – the property itself, recent comparable sold properties and how it compares, and how well it holds its value, to determine whether you are making a good decision purchasing the property at the offered price and the bank is making a good decision lending you the money.
An appraisal can take one to three weeks for completion, depending upon the time of year and the type of loan that you are getting. The goal for any appraisal is that the property comes in at value. Sometimes a property will appraise for more than the sale value, which is great news for you. If a property appraises below value, there are three options for a buyer: 1) a buyer can walk away from the deal with their earnest money, 2) the seller of the property can choose to sell the property at the appraised value, or 3) the buyer and seller can choose to come to an agreement on how the difference in price is going to be made up. The bank is not willing to loan on the difference in price between the appraisal and the offer price. If you don’t have extra cash when you come into the deal, we will work with you and hopefully find an equitable solution for all so you can still purchase the property.
Watch this video as Caleb and Ellie discuss the appraisal process. The final step in the home buying process is Closing!