The Appraisal

The Appraisal Process: What You Need to Know

Congratulations! If you’ve reached this stage, you’re officially under contract, and your earnest money deposit has been submitted. Now, it’s time for the appraisal—a crucial step in securing your mortgage.

What is an appraisal? Click here to read our in-depth guide.

Understanding the Appraisal Process

The appraisal is conducted to ensure that the home’s value aligns with the purchase price. Since your lender is financing a portion of the home, they need to confirm that the property is worth what you’ve agreed to pay.

🔹 Who Orders the Appraisal?

• Your mortgage lender orders the appraisal.

• At some point, your lender will request your credit card information for payment (if they haven’t already).

• The cost typically ranges from $450 – $850 and is part of your closing costs, though it is paid upfront.

🔹 Who Attends the Appraisal?

• You (the buyer) do not need to attend.

• Your Realtor does not attend.

• The seller’s Realtor is usually present to provide access to the appraiser.

Timeline & What to Expect

Step 1: Pay for the appraisal when requested by your lender.
Step 2: The appraiser visits the property—this usually happens within a week of ordering.
Step 3: The appraiser compiles their report, which takes another 5-7 days.
Step 4: Your lender receives the report, reviews it, and sends you a copy.

Total Estimated Timeline: 2 Weeks

What Do the Appraisal Results Mean?

Once the appraisal is complete, there are three possible outcomes:

✅ Appraisal Matches Purchase Price

• Great news! Nothing further is needed, and the transaction moves forward as planned.

📈 Appraisal Comes in Higher Than Purchase Price

• Even better! This means you’re getting an instant equity boost in your home. However, this equity is not immediately accessible—you’ll benefit from it if you refinance or sell later.

⚠️ Appraisal Comes in Lower Than Purchase Price

• This presents a challenge because lenders will only finance up to the appraised value—not the contracted purchase price.

• In this case, we’ll need to renegotiate with the seller to lower the price.

Possible Solutions if the Appraisal is Low:
1️⃣ Negotiate the Purchase Price – Ideally, the seller agrees to lower the price to the appraised value.
2️⃣ Buyer Pays the Difference – You can bring additional funds to closing to cover the gap between the appraisal and the agreed price.
3️⃣ Cancel the Contract – If the seller won’t reduce the price and you’re unwilling to pay the difference, you have the right to walk away and receive your earnest money back.

Example:

• Your agreed purchase price is $500K, but the appraisal comes in at $480K.

• If the seller refuses to lower the price below $485K, you would need to bring an extra $5K in cash on top of your down payment and closing costs to cover the shortfall.