If you’re ready to purchase a new home or are looking to sell a current one, the appraisal process is your first step. When an appraisal happens, an appraiser is hired to come to the home and review the property as is.
They’ll look for signs of damage, updates completed on the home, type of furnishings, and review both interior and exterior square footage. Once they complete their inspection they will put everything they noticed into a report and give the report an appraisal price. This price will often be the asking price of the home for sale.
Getting a mortgage on a home for sale
When a buyer is looking to purchase a home with a mortgage, most mortgage companies will ask to have the appraisal done before you come to them with the home’s information – and they may even provide an appraiser in their location for you to use.
If it happens that the appraisal is far less than the home’s asking price, the mortgage lender may not allow you to purchase the home without a substantial down payment that covers the difference of the worth and asking price.
Often times, if the home is appraised less than the purchase price then it’s not a good purchase. The owner in this instance is asking for more money than the home is worth and if you resell in the future, you’ll likely lose money with the transaction.
If you have an appraisal contingency in your contract you have the right to back out of the purchase agreement if the owner is not willing to renegotiate the selling price. Appraisal contingencies are always a safety bet to have in your contract and are recommended.
