An important step in the loan approval process is the appraisal. The buyer’s lender orders an appraisal and the appraiser will contact me to schedule a time to see the home. The purpose of the appraisal is to provide the lender with an estimated value of the property. They review this report when processing the buyer’s mortgage application and approval. Here is what you need to know…
Who attends the appraisal appointment?
We do! Most times, I meet the appraiser at your home and provide them with any requested information (i.e. survey, copy of the contract), the MLS listing, a list of features and recent comparable sales that support the contract price.
What happens at the appraisal appointment?
The appraiser must photograph every room and the front and back of the house. They may measure rooms. They will take notes and may look for specific things. The utilities must be turned on. There cannot be people or animals in the photos. The appraiser usually asks for a list of updates in the last 5-10 years which I will provide. Appraisal appointments usually take less than 30 minutes.
How long will it take for the report to be submitted?
Most appraisers will submit the appraisal report within 3-5 business days of their appointment.
Does my house have to look perfect for the appraisal?
No. Appraisers know that you are moving and might be packing. Use common sense and it will be fine.
Will we get a copy of the appraisal report?
We usually never see the report. It belongs to the lender and the buyer. The buyer’s application fee covers the cost of the appraisal and they are not obligated to share it with us.
Will we know what value is in the report?
We rarely know the value of the report. We will most likely get a notice that the appraisal supported the value and it has been submitted with the buyer’s loan package. No news is good news in most cases.
What if my house appraises for a value less than the contract price?
This is a rare occurrence for me. If the buyer is borrowing 80% of the sale price, the lender will loan them 80% of the appraised value. We have several options in a low appraisal situation.
- The parties can agree to split the difference of the variance. Seller will adjust the price and buyer will increase their down payment to cover the deficit.
- The seller can agree to accept the appraised value.
- The buyer can agree to increase their down payment to cover the shortage.
- The listing agent can dispute the appraisal by providing additional data to support the contract price.
- The buyer can terminate the contract based on the denial by the lender to approve the loan due to the low appraisal.
This is a very uncommon scenario and I have not had a low appraisal in many years. I have never had a sale terminate over the appraisal. I have met hundreds of appraisers and may know your appraiser from a past sale. They are not looking for a way to derail our sales. Most appraisers will let me know if they have trouble supporting the sales price and give me an opportunity to provide additional data. Don’t sweat it. I have this under control!
*If your buyer is applying for an FHA or VA loan, the appraisal process is a little more involved. I will be prepared if this is the case.