Low Appraisal And How It Impacts A Sale
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 the buyer's lender. If the buyer is getting a loan, we 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:
Is there always an appraisal for a home under contract? If the buyer is paying cash, no. This is a benefit of having a cash offer.
Who pays for the Appraisal? The buyer will pay for the appraisal.
When is the Appraisal Ordered? The appraisal is ordered at the time of mortgage application submission. Occasionally, banks will order appraisals after the buyer has been approved; which may prolong closing.
Who Selects the Appraiser? 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 the buyer to get their loan approval. If the appraisal affects the buyer's loan, our team will review the report to see if there are errors that could be fixed. If the appraisal is for an FHA loan, it will remain with the home for four months. If the financing is conventional, it will not stay with the home. We will attempt to negotiate the appraisal issue; but if an agreement can not be met, your home will return to the market.