Can You Sign Purchase and Sale Before Home Appraisal?
When you are in the process of buying a home, there are several important steps that need to be taken before the deal is finalized. One of these steps is the home appraisal, which is an assessment of the property’s value by a professional appraiser. Many buyers wonder if they can sign the purchase and sale agreement before the home appraisal is completed.
The short answer is yes, you can sign the purchase and sale agreement before the home appraisal is done. However, it is important to understand the implications of doing so.
Signing the purchase and sale agreement before the home appraisal means that you are committing to buying the property at the agreed-upon price, regardless of what the appraisal may reveal. If the appraisal comes back lower than the agreed-upon price, you may need to renegotiate with the seller or come up with additional funds to cover the difference. This is why it is crucial to have a contingency clause in the purchase and sale agreement that allows you to back out of the deal if the appraisal results are not satisfactory.
It is always recommended to wait for the appraisal to be completed before signing the purchase and sale agreement, as it can help you make a more informed decision about the property’s value. However, if you are in a competitive market where homes are selling quickly, you may choose to sign the agreement before the appraisal to secure the property and then use the results of the appraisal to renegotiate if necessary.
FAQs:
1. What is a home appraisal?
A home appraisal is an unbiased estimate of the fair market value of a property conducted by a licensed appraiser.
2. Why is a home appraisal important?
A home appraisal is important because it ensures that the property is worth the amount you are paying for it and helps you secure financing from a lender.
3. Who pays for the home appraisal?
Typically, the buyer is responsible for paying for the home appraisal as part of the closing costs.
4. How long does a home appraisal take?
A home appraisal usually takes a few days to a week to complete, depending on the size and complexity of the property.
5. What factors do appraisers consider when assessing a property?
Appraisers consider factors such as the property’s location, size, condition, amenities, and recent sales of comparable properties in the area.
6. Can you negotiate the price of a property based on the appraisal results?
Yes, if the appraisal comes back lower than the agreed-upon price, you can renegotiate with the seller or back out of the deal.
7. Can a low appraisal affect your ability to get a mortgage?
Yes, a low appraisal can affect your ability to secure financing from a lender, as they may be reluctant to loan you more money than the property is worth.
8. What happens if the home appraisal comes back higher than the agreed-upon price?
If the appraisal comes back higher than the agreed-upon price, it can benefit you by increasing the equity in the property and potentially lowering your interest rates.
9. Can you order a second appraisal if you disagree with the first one?
Yes, you can order a second appraisal if you feel that the first one was inaccurate or unfair.
10. Is a home inspection the same as a home appraisal?
No, a home inspection is a thorough examination of the property’s condition and structure, while a home appraisal focuses on its market value.
11. Can you waive the appraisal contingency in a purchase and sale agreement?
Yes, you can waive the appraisal contingency, but it is not recommended as it leaves you vulnerable to overpaying for the property.
12. Can you get a copy of the home appraisal report?
Yes, you have the right to receive a copy of the home appraisal report once it has been completed.