The appraisal is a crucial step in the homebuying process. It involves an independent professional assessing the value of the property you want to purchase. So, what happens after the appraisal comes back?
After the appraisal comes back, the lender reviews the report to ensure the value of the property meets or exceeds the loan amount. If the appraisal supports the purchase price, the process moves forward smoothly. However, if the appraisal comes in lower than expected, it can cause delays and challenges in the transaction.
What are common reasons for a low appraisal?
A low appraisal can occur due to a variety of reasons, such as a lack of comparable sales in the area, recent renovations or upgrades not being considered, or mistakes made by the appraiser.
Can I challenge a low appraisal?
Yes, you can challenge a low appraisal by providing additional evidence, such as recent comparable sales or details on recent upgrades to the property. However, the success of a challenge depends on the lender’s willingness to reconsider the appraisal.
What happens if the appraisal comes in higher than expected?
If the appraisal comes in higher than expected, it can be beneficial for the buyer as it means they have more equity in the property. However, it is ultimately up to the lender to determine how to proceed with a higher-than-expected appraisal.
Does a low appraisal mean I have to lower my offer?
While a low appraisal may lead to negotiations between the buyer and seller to lower the purchase price, it is ultimately up to both parties to come to an agreement. The lender may require the buyer to cover the difference if they still want to move forward with the purchase.
Can I request a second appraisal if I disagree with the first one?
In some cases, a second appraisal may be requested if there are discrepancies or concerns about the initial appraisal. However, this is not guaranteed, and the lender will ultimately decide whether a second appraisal is necessary.
How long does it take to receive the appraisal report?
The appraisal report typically takes a week to 10 days to be completed and sent to the lender. However, this timeline can vary depending on the workload of the appraiser and the complexity of the property.
Who pays for the appraisal?
Typically, the buyer is responsible for paying for the appraisal as part of the closing costs. However, some sellers may agree to cover the cost of the appraisal as part of the negotiation process.
What if the appraisal comes in exactly at the purchase price?
If the appraisal comes in at the purchase price, it indicates that the property is valued correctly based on market conditions. This is an ideal scenario as it means there are no complications or challenges to the transaction.
Can I use a previous appraisal for a new purchase?
In most cases, a previous appraisal cannot be used for a new purchase as the value of the property may have changed since the original appraisal was conducted. A new appraisal is typically required for each new transaction.
What happens if the appraisal is significantly lower than the purchase price?
If the appraisal is significantly lower than the purchase price, it can lead to challenges in the transaction, such as renegotiations between the buyer and seller or the buyer needing to come up with additional funds to cover the difference.
What can I do to ensure a favorable appraisal?
To help ensure a favorable appraisal, you can provide the appraiser with information on recent upgrades or renovations to the property, offer comparable sales in the area that support the purchase price, and maintain the property in good condition.
Who selects the appraiser?
The lender typically selects the appraiser to ensure independence and impartiality in the appraisal process. However, the buyer or seller may also have input in selecting the appraiser in some cases.