What Happens During a Home Appraisal?
April 19, 2023
Getting appraisals for your home when you are buying or refinancing can be challenging. If the appraisal comes in higher or lower than the sale price, both parties will need to negotiate accordingly. Therefore, it is important to know what home appraisals consist of and what sellers can do to move the process along successfully.
If the home you want to buy appraises for less than your offer price, you may choose to:
- Make up the price difference by finding the additional funds to pay the amount between your down payment and your loan. The seller may also agree to lower the listing price but in today’s competitive market, this is becoming more uncommon.
- Cancel the deal if you have an appraisal contingency. If the appraised value comes in less than the agreed on purchase price, and you do not have the necessary funds to pay the difference, you may be able to get back your deposit if you have met the terms and deadlines of your offer.
During a home appraisal, a licensed appraiser conducts an inspection of the property. If you already have a loan, the lender usually orders the appraisal as they are the ones to bring the most money to the purchase. During the home appraisal, the appraiser will review ‘comps.’ Comps for a property refer to nearby, similar properties that have recently sold. This helps the appraiser to understand the local real estate market and factor it into the property value. During the property visit, the appraiser will consider the other aspects that affect property value such as the property’s condition, value-adding or detracting features, upgrades, additions and lot size. When the appraiser is finished inspecting the property and area comps, he or she will put their findings into an appraisal report. Most importantly, they will finalize the appraised home value.
If you are tasked with finding a reliable appraiser, find one that bases their opinion on a mix of experience and education and writes their report in a way that conforms to the Uniform Standards of Professional Appraisal Practices set by the Congress-approved Appraisal Foundation. It may be helpful to begin the search process at the federal government’s Appraisal Subcommittee Website, which provides links to state government websites that list state-certified appraisers. Check to ensure that their certifications are still valid and search the national registry to check if they have been a subject of any disciplinary actions. Contact the appraisers you are interested in and ask for references. You will want to select the appraiser with whom you feel the most comfortable based on references, pricing and the rapport you may have established.
At Superior Mortgage Co., Inc., we specialize in residential and commercial loans and provide the best products and services available. Whether you are purchasing, refinancing or in need of a home equity loan, and regardless of any credit problems, we can help you. Contact the company with the answers you need. Call us at 845-883-8200.