Financial Advice

Buy & Own a Home

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Understanding Appraisals

Before investing in an appraisal, you'll want to use your option period to complete all property inspections to your satisfaction. At that point, your real estate agent will let us know that the contract is a "go" and we order an appraisal.

A certified appraiser will visit the property, measure it, and note the property's features and condition. The appraiser compares your property to other recent comparable properties sold, and adjusts the value to account for differences in size, age, condition and features. Their professional opinion of value, or appraisal, is used by the lender to determine that there is enough value in the home to justify the sales price and the mortgage amount. For this reason, appraisals are normally conservative. Do not be disappointed if the appraised value is very close to your sales price; the appraiser's function is simply to validate what you have paid.

What happens if the appraisal comes in less than the sales price? Several options are available.

  • The seller may agree to lower the sales price to the appraised value.
  • You may choose to take the home at the agreed upon original sales price and increase your down payment to cover the difference.
  • You, and/or the seller, may contest the appraisal. Your agents can provide newer, or different, comparable sales information, and ask the appraiser to reconsider the value previously stated.