The Home Appraisal Process and How It Can Impact Your Mortgage Payments By Jamie Wiebe

If you’ve applied for a mortgage, your home-to-be still has to undergo a comprehensive appraisal of its worth—and an unfavorable home appraisal can kill a real estate deal. Yikes! It can be a nerve-racking ordeal, but it’s actually good for you. 

Appraisals estimate a home’s value with fresh eyes!

• Just because you and the sellers have agreed on a price doesn’t mean it’s a done deal—your lender needs to be on board, too. After all, it’s the lender’s real estate investment as well. To get a mortgage, you’ll need a home appraisal because the home serves as collateral for your lender.

You’ll get a copy of the home appraisal, too.

• An appraiser doesn’t have the same job as a home inspector, who examines every little detail. While they’ll pay particular attention to problems with the foundation and roof, the home appraisal process includes noting the quality and condition of the appliances, plumbing, flooring, and electrical system. With data in hand, they make their final assessment and give their report to the lender. The mortgage company is then required by law to give a copy of the appraisal to you.

Appraisers work for your lender—not you.

• This ensures that appraisers remain ethical—in fact, it’s a crime to coerce or put any pressure on an appraiser to hit a certain value. Appraisers must remain independent.

They protect buyers from a bad deal.

• If the appraisal comes in higher than your asking price, it’s generally fine.
• Your lender won’t pony up more money than the appraised price. 

A curveball appraisal isn’t necessarily the end.

• If the appraisal process happens, your appraisal comes in low, and your contract with the seller was contingent on an appraisal, you could walk away and have your earnest money returned.
• Ask the seller to cover the difference.
• Challenge the appraisal, and pay for a second opinion.
• Once your appraisal is done, you’re still not ready to close without another step called a home inspection.

For more information about the Home Appraisal Process go to bmre.us/tip18a