Appraising the Situation

What Is An Appraisal

When buying a home, you don't want to pay more than the home is worth. Your real estate agent can do a comparative market analysis (CMA) on it to determine the approximate market value. And just like you don't want to pay more than the house is worth, the bank doesn't want to loan more on it than it's worth.

The Appraisal

In comes the appraisal. It is ordered by the lender and they bring in their own people. The appraiser is licensed by the state and, like a CMA, uses recently sold properties to determine if the house is worth at least what the loan amount is for. And, like a home inspector, this person will look at the condition of the home. Adjustments are made to the house's value based on the condition.

Can I Order My Own Appraisal

Yes, and it will cost several hundred dollars. However, the bank probably will not take it. They want a disinterested third party, not someone with a stake. They have their own appraisers and will more than likely ignore yours to do their own. Save your moeny for that new carpet you're wanting to put in the living room.

What If the House Doesn't Appraise?

The buyer and seller will need to renegotiate the price. The buyer can put more money down to get the loan amount down to the appraised value. Or, if the contract was written with the right clause, the buyer can walk but may have to forfeit the earnest deposit.

Know Your Numbers

An appraisal shouldn't be a surprise. If you and your Realtor have done your homework, you'll know the approximate market value. If the appraisal comes in low, it won't be by very much. You can protest the valuation from the appraiser with solid numbers.