APPRAISAL process when buying
In any real estate market, there are really two issues: what is a home worth and what can you get for it. This is especially true in a seller's market. So the appraisal is done to determine what it is worth in the eyes of your lender. If you are getting a loan, the appraisal is important and you cannot get to closing until the appraisal is complete, reviewed, and approved. Here are a few common questions about the appraisal process on your home:
Do I always need an appraisal? If the buyer is paying cash, no. This is a benefit of having a cash offer and why sellers will often take a cash offer over a financing deal. Also if you are putting a large downpayment down, it is helpful in case the home does not appraise.
Who pays for the Appraisal? You as the buyer will pay for the appraisal. It will be given to your lender.
When is the Appraisal Ordered? The appraisal is ordered during the mortgage application process as soon as the disclosure waiting periods are over.
Can I select the appraiser? Not anymore. The day when there was any influence over who did the appraisal are gone. In fact, this is a drastic change to the way appraisals are hired. The appraiser is selected from a pool of appraisers. Therefore, a mortgage professional; a real estate agent; nor the buyer selects the appraiser. The hope is that this blind selection keeps the process pure and at arm's length.
What Happens if the Appraisal is low? It really depends. In some cases of large down payments, the appraisal doesn't impact the ability for you to get their loan approval. If the appraisal affects the ability to obtain the loan, our team will review the report to see if there are errors that could be fixed. If the appraisal is accurate, one of the three things can happen: the seller can reduce the purchase price of the home to the appraised value, you as the buyer can pay the difference or it can be split between the buyer and the seller. In the event that non of the three solutions can be agreed upon, the contract will need ot be cancelled.