what is an appraisal and why are they done?
After the inspection resolution has been fully executed and signed it’s time to have the home appraised. The lender will order the appraisal but the buyer must authorize the appraisal fee before the appraisal is conducted, in other words, the lender orders the appraisal and the buyer pays for it, on average an appraisal usually costs around $650.
But what is an appraisal and why do you have to get the home appraised? The actual appraisal is the process of an appraiser going over to the property and assessing, measuring and visually inspecting the property. The appraiser will take photos of the interior and exterior and make notes of the overall condition of the home. Then they will run recently sold comparables in the same subdivision to establish a purchase price and verify that the price the buyer is paying for the home isn’t too expensive.
Now this process might save the buyer from possibly over paying on the property but the appraisal is actually for the buyer’s lender and enables the lender to make sure they will not be lending the buyers more money than the home is actually worth. If the house appraises for the contracted purchase price, the appraisal is then submitted to the mortgage underwriter along with other verification information to get the loan. The mortgage underwriter will then begin working on getting the buyer their loan and approval to close. But what happens if the home appraises for less than the purchase value. If this happens all parties are released from the contract and either the buyer and the seller negotiate the price, the home is put back onto the market OR the home is reappraised by a different appraiser in hopes that the home will appraise for equal to or more than the purchasing price.
