A home appraisal is an assessment from an expert what the value of the home should be.
The appraisal is based on a few factors:
It’s a required document that allows a mortgage lender to fully understand the risk of making a loan. This is because in the case of default on the loan, the lender wants to know that the loan isn’t too big vs the property value.
An appraiser is someone who has the knowledge and expertise to come up with an estimate on the value of a property.
It often is dependent on the value of the property, we have seen the typical range about $300-$600 for a home appraisal.
When determining the value of a home, there’s a pretty standard process that all appraisers follow.
The Uniform Residential Appraisal Report, has a form you can fill out to answer questions about:
Making sure you have the right appraisal company is very critical when evaluating the home price.
The following tips will help you find the right appraisal company:
If you are getting a mortgage, the bank might require that you work with their appraisal company, or even choose from a selection of approved vendors.
A lower appraisal price can be a bit of a pain with moving forward on the loan because the lender cannot lend more money than the home is worth.
However, don’t worry there’s no need to panic. There are a few solutions as a buyer to keep the deal alive:
In the end, if you choose to walk away from the deal because none of the solutions above work.... there’s always the chance the seller drops the price of the home in the future or comes back to renegotiate with you. At the end of the day, if the property is appraised at a lower than asking price, more likely or not future buyers will have the same issue. Negotiate with the seller!