Prepare to pay the appraisal, or to negotiate
Typically, the homebuyer pays the appraisal, a fee that is often included in closing costs. However, it is possible to negotiate this point. It never hurts to see if the seller is willing to cover it.
How much money are we talking about? The average professional home appraisal costs between $287 and $373, according to estimates published by HomeAdvisor.com, a site that gathers information on housing professionals. Costs can vary based on square footage and home features, and will be higher for larger homes or homes with unique features.
Patience: appraisals take time
A purchase contract typically has a “home appraisal contingency” that requires the appraisal to be completed within 14 days of signing the contract. Because it takes some time for appraisers to visit the home and write the report, up to a week or more in an active real estate market, your lender will most likely request the appraisal immediately after it is signed. the purchase contract.
Do you already have the appraisal? What does it mean and what is the next step?
After the appraisal is complete, the appraiser issues a written report with his opinion of the home’s value. To produce the report, it starts with your analysis of the property and incorporates data from comparable homes, as well as reviewing the purchase offer. The report will describe the methodology applied and will also include photographs taken of the property, inside and out.
Both you and your credit institution will receive a copy of the report. Three things could happen next:
• The appraisal matches the price agreed with the seller for the home: Your credit institution will proceed to process the loan. That’s great news: It’s the final step in the process of getting a loan!
• The appraisal is more than the price you will pay for the house: Congratulations! You have increased your capital immediately. How is this? Let’s say, for example, that you are going to pay $200,000 for the house. If the appraiser says it’s worth $250,000, you’ve hit the jackpot! You instantly have $50,000 more. (Note that this is very rare.)
• The appraisal is lower than the price you plan to pay: Your credit institution will only give you a loan equivalent to the value of the appraisal. If, for example, the price agreed with the seller is $200,000, but the appraisal is $190,000, a shortfall of $10,000 is generated. And now, what happens?
Not to despair There are several things you can still do in the face of a low appraisal.
If the appraisal is low, there are still a few things that can be done
Before looking at the strategies, let’s see why an appraisal may be lower than expected:
• The seller overvalued the price of the house. • The appraiser is not familiar with the neighborhood.
• The appraiser missed the pending sales data.
• The appraiser could not find comparable houses, or did not consider some, so he compared the house with properties in other neighborhoods.
• Home prices in the area change so quickly that the seller’s agent price no longer reflects market value.
• The appraiser did not spend the necessary time on the task.
