This is where your lender orders an appraisal on the property you have a contract on, provided that one is required to determine your property’s value. If the property appraises at the purchase price listed in your contract, then all parties can continue moving forward with the transaction. This is the typical outcome of an appraisal. The appraiser is determining if the value exists that a reasonable purchaser wanted to pay (or several reasonable purchasers, if there were multiple offers). If the property appraises above the purchase price, congratulations! You made a great buy and you can feel good about instant equity. If the property appraises lower than the purchase price, then we’ll have a few options we can discuss with the seller:
The seller can reduce the sales price to the appraised price
You and the seller can meet in the middle and each give a little bit to make up the difference
Or, you can walk away from the transaction
Remember, the appraisal is always a great way to feel safe in your transaction that you are not going to pay more than the property is worth. Most lenders require an appraisal to verify that a disinterested third party agrees with the value that the Realtors and principals in the transaction agreed upon. But, if the buyer is putting enough money down in a down payment, the lender may issue an appraisal waiver so an appraisal doesn’t have to be done. This can save the buyer potentially around $500 of an out-of-pocket expense. It isn’t routinely done, but can be requested. If the buyer is purchasing a property in all cash, an appraisal is not required.
If you’re considering buying a home, contact Team Thiel today!