One of the most common situations that homebuyers and sellers encounter is when the appraisal of a property comes in higher than the agreed-upon purchase price. This scenario may leave both parties wondering what their next steps should be. If you find yourself in this position, here is a guide on what to do next.
What if my appraisal comes in higher than purchase price?
If your appraisal comes in higher than the purchase price, congratulations! This means that you have equity in the property right from the start. This can give you more options and flexibility as a buyer or seller.
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. How is an appraisal different from an inspection?
An appraisal determines the value of a property, while an inspection evaluates the condition of the property.
3. Why would an appraisal come in higher than the purchase price?
Several factors can contribute to an appraisal coming in higher than the purchase price, such as a strong real estate market, recent improvements to the property, or comparable sales in the area.
4. Can I use a higher appraisal to negotiate a lower purchase price?
While it is possible to use a higher appraisal as leverage in negotiations, the seller is not obligated to lower the purchase price.
5. Can I get a copy of the appraisal?
As the buyer, you have the right to receive a copy of the appraisal report from your lender.
6. Can I still get a mortgage if the appraisal comes in higher?
Yes, you can still proceed with your mortgage application even if the appraisal comes in higher than the purchase price.
7. What happens if the appraisal comes in lower than the purchase price?
If the appraisal comes in lower than the purchase price, you may need to renegotiate the terms of the sale or come up with additional funds to make up the difference.
8. Can I request a second appraisal if I disagree with the first one?
In some cases, you may be able to request a second appraisal, especially if you believe the first one was inaccurate.
9. Do I have to use the appraiser selected by the lender?
While you may have the option to choose your own appraiser, the lender ultimately decides who conducts the appraisal.
10. How long is an appraisal report valid for?
An appraisal report is typically valid for a specific period, such as 90 days, depending on the lender’s requirements.
11. What should I do with the extra equity if the appraisal comes in higher?
If you have additional equity in the property due to a higher appraisal, you can consider using it for renovations, investments, or saving it for future expenses.
12. Should I still get a home inspection if the appraisal comes in higher?
Yes, it is still recommended to get a home inspection even if the appraisal comes in higher than expected. Inspections can uncover issues that may not be reflected in the appraisal value.