Step 18 - The appraisal

The Appraisal

Great news! If you've reached this point, it means you're under contract and have already dropped off your earnest money deposit. Now, it's time for the appraisal.

What exactly is the appraisal?  Check out this blog post to get all the details! 

The appraisal is ordered by your mortgage lender, who will reach out to you at some point to obtain your credit card to pay for the appraisal if they haven't done so already. The cost typically ranges between $350 – $750 and is considered part of your closing costs, even though you pay for it upfront.

Here are a few tips about the appraisal process:

- You do not need to attend the appraisal.
- The buyer’s REALTOR® does not attend either. Only the seller’s REALTOR® is present.
- After you've paid for the appraisal, it generally takes about a week for the appraiser to conduct the appraisal. Then, it usually takes another week or so for the report to be written. Expect it to take about 2 weeks from when you pay for the appraisal until you receive the report.
- Once the report is completed, it’s given to your mortgage lender. They will then forward it to you and let you know whether the property appraised at, below, or above the purchase price.

Here's what the appraisal results could mean for you:

- If the property is appraised at the purchase price, nothing further needs to be done, and the closing process will proceed as planned.
- If the property appraised for more than the purchase price, that's fantastic news! It means you've secured a great deal and will have instant equity in your home on the day you move in! But remember, it’s not equity that you can tap into immediately.
- If the property is appraised for less than the purchase price, we have a challenge. This means the bank will only provide a loan for the appraised value. In this case, we'll need to go back and renegotiate the purchase price down with the sellers, ideally to the appraisal price. If they won’t come down to the appraisal price, then you can choose to either walk away and get your earnest money back or bring the additional funds to closing.

For instance, if the purchase price is $500K, but the appraisal only came in at $480K and the sellers won’t go any lower than $485K, you'll need to decide if you're willing to bring an extra $5K on top of your down payment and closing costs to closing or walk away from the deal.

If you have any questions or need further guidance about the appraisal process, feel free to reach out to us anytime. We're here to help you through this important stage of your home purchase!

Let me know if you need any more assistance!