How does the appraisal process work?

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Real Estate

After the ten day inspection period is over, the next step in the home buying process is the appraisal. Although a loan officer hires the appraiser, you as a buyer are still responsible for the cost of the appsial. The cost of an appraisal can range from $200 to $500 depending on the size of the house. The loan officer requires an appraiser to go out to the property to determine the value of the property. If the appraiser determines that you are overpaying for the property than the bank will not give you a mortgage for that property. Keep in mind the bank does not like to make bad investments. Now, you may be thinking.. “Well what if I fall in love with the house, and want it even if I know I am overpaying for it?” Let me give you an example of how it plays out if it is determined that you are overpaying for a house. Let’s say the agreed upon price for a house is $250,000; however, the appraiser determines that the house is only worth $240,000. Therefore, the loan officer will only lend you a mortgage based on $240,000. You as a buy have a few options. One, you ask the seller to lower the agreed upon price to the appraised value of $240,000. Two, you can come up with the difference of 10k and put it down toward the house so you are still only taking a mortgage based on the appraised value of $240,000. The third option is to get your deposit back, and back out of the contract and begin searching for another home. I find the appraisal to be a huge advantage to you as a buyer. Real estate is one of the best investments you can make. Now isn't it awesome that you can have a professional determine if you are overpaying for one of the largest investments of your life, and have the option to get your deposit money back if you are? That is not common.. Think of buying your own business, or buying yourself stocks. If you invest thousands of dollars into a business or stock, you can't have a professional determine if you overpaid for your business or stock, and be able to get your money back if you did.

 

 

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