Appraisals

As a Buyer

• If you are the Buyer and you are borrowing money, your Lender will probably order an Appraisal. 
• This Appraisal is for the Lender and is essentially a risk assesssment regarding the amount of money they are lending versus the value of the property.
• The cost of this Appraisal is part of the Buyer’s Closing Costs.
• The Appraisal is usually ordered after the Home Inspection has been completed and any repairs are successfully negotiated. 
• If you are making a substantial downpayment AND the lender’s valuation model determines that the sale price is within their acceptable range, the Lender may waive the appraisal. This is usually good news because it means that there is one less hurdle to cross. It also saves the Buyer money by not having that expense. However, some Buyers want a full-blown appraisal even if it is not needed for loan approval.
• There is usually a contingency time period by which the Appraisal must be completed.
• If the Appraisal comes back below the Sale Price and within the Contingency Period, the Buyer may ask for a price reduction.
• It is not unusual for the Appraisal to come in exactly at the Sale Price. Remember – this is a risk assessment for the amount of money being loaned. There is no motivation for an Appraiser to go above the Sale Price. In fact, doing so just increases their risk and exposure unless the higher value is clearly justifiable. 
• For most Buyers, having the appraisal come back ok is enough.

As a Seller

• If your Buyer is borrowing money, their Lender will probably order an Appraisal.
• This Appraisal is for the Lender and is essentially a risk assesssment regarding the amount of money they are lending versus the value of the property. The Lender typically does not disclose what the property appraises for unless it comes in below the contract Sale Price. The Seller is not entitled to the valuation.
• The cost of this Appraisal is part of the Buyer’s Closing Costs.
• The Appraisal is usually ordered after the Home Inspection has been completed and any repairs are sucessfully negotiated.
• You do not have to be away from the property when the Appraiser comes by. 
• If the Buyer is making a substantial downpayment AND the lender’s valuation model determines that the sale price is within their acceptable range, the Lender may waive the appraisal. This is usually good news becuase it means that there is one less hurdle to cross. It also saves the Buyer money by not having that expense. However, some Buyers want a full-blown appraisal even if it is not needed for loan approval. This option is up to the Buyer.
• There is usually a contingency time period by which the Appraisal must be completed.
• If the Appraisal comes back below the Sale Price and within the Contingency Period, the Buyer may ask for a price reduction.
• It is not unusual for the Appraisal to come in exactly at the Sale Price. Remember – this is a risk assessment for the amount of money being loaned. There is no motivation for an Appraiser to go above the Sale Price. In fact, doing so just increases their risk and exposure unless the higher value is clearly justifiable. 
• For most Sellers, having the appraisal come back ok is enough because it means the final sale price will be the price they were expecting. Occasionally, Sellers will want to know what the actual number was. We may or may not be able to get that information for you. If it comes in above the sale price, you may be tempted to wonder if you could have sold for more. The problem is, the Appraisals are usually one of the last things in the loan approval process and by then there is no there is little to nothing a Seller can do at that point.