Buying a home can be an exciting and nerve-wracking experience. One common issue that can arise during the home buying process is when the closing date comes before the appraisal. This can potentially delay the closing or even cause the deal to fall through. So, what exactly happens in this situation? Let’s dive into it.
What happens if the closing date comes before the appraisal?
When the closing date comes before the appraisal, it can cause a delay in the closing process. Lenders typically require an appraisal to ensure the home is worth the agreed-upon price. If the appraisal comes in lower than the purchase price, the buyer may need to come up with additional funds to cover the difference. In some cases, the seller may agree to lower the price to match the appraised value. If an agreement cannot be reached, the deal may fall through.
FAQs:
1. Can the appraisal be done before the closing date?
Yes, the appraisal can be done before the closing date to avoid any potential issues. It is typically recommended to have the appraisal done early in the process to ensure there are no surprises later on.
2. What happens if the appraisal comes in higher than the purchase price?
If the appraisal comes in higher than the purchase price, it is generally good news for the buyer. This means they are getting a good deal on the home and may even have instant equity.
3. Can the closing date be extended if the appraisal is delayed?
Yes, the closing date can be extended if the appraisal is delayed. Both parties will need to agree on the new closing date, and any financing contingencies may need to be adjusted accordingly.
4. Can the buyer walk away if the appraisal comes in low?
Yes, the buyer can walk away if the appraisal comes in low. In most cases, the buyer’s financing contingency allows them to back out of the deal if the home does not appraise for the agreed-upon price.
5. What can sellers do if the appraisal comes in low?
If the appraisal comes in low, sellers can choose to lower the price to match the appraised value or try to dispute the appraisal. However, disputing an appraisal can be a lengthy and uncertain process.
6. Who pays for the appraisal?
In most cases, the buyer pays for the appraisal as part of their closing costs. The cost of the appraisal varies depending on the size and location of the home.
7. How long does an appraisal typically take?
An appraisal typically takes about one to two weeks to complete, but this can vary depending on the appraiser’s schedule and the complexity of the property.
8. Can the buyer request a second appraisal?
Yes, the buyer can request a second appraisal if they believe the first appraisal was inaccurate. However, the lender will need to approve the second appraisal, and the buyer will need to pay for it.
9. What factors do appraisers consider when valuing a home?
Appraisers consider factors such as the size and condition of the home, comparable sales in the area, and market trends when valuing a home.
10. Can buyers waive the appraisal contingency?
Buyers can choose to waive the appraisal contingency, but this is not typically recommended. Waiving the appraisal contingency means the buyer is agreeing to purchase the home regardless of the appraised value.
11. Can sellers refuse to lower the price if the appraisal comes in low?
Sellers can refuse to lower the price if the appraisal comes in low. In this case, the buyer can choose to come up with the additional funds to cover the difference or walk away from the deal.
12. What happens if the appraisal is higher than the seller’s asking price?
If the appraisal is higher than the seller’s asking price, it can benefit both parties. The buyer is getting a good deal on the home, while the seller is receiving more than they initially expected.
Overall, it is crucial for both buyers and sellers to be aware of the potential issues that can arise when the closing date comes before the appraisal. By staying informed and proactive throughout the home buying process, both parties can work together to ensure a smooth closing.