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Whether you’re looking to buy or sell a home, it is important to learn about the appraisal process.
What is a home appraisal?
A professional third-party analysis of a properties value.
Do I have to have an appraisal?
If you are obtaining a mortgage to pay for a home, your lender will require an appraisal. This verifies the collateral meets the loan amount preventing the bank from lending more money than the home is worth. If you are a cash buyer, we recommend getting an appraisal to ensure that the home you are buying is worth the money you are paying.
What is an appraiser looking for?
The appraiser determines the worth of a home based on anything that would add or subtract to the value of the home. Location, age, condition, square footage, # of bedrooms, # of bathrooms, renovations, area comparable sales, etc.
Who pays for the appraisal?
The appraisal is paid for by the buyer during the contract process before closing. The going rate for appraisals is $400 – $500 depending on the size of your home. Sometimes sellers choose to pay for an appraisal before selling their home to better determine what the listing price should be. We feel that this is a best practice in our industry.
The appraisal is ordered by the buyer’s lender within the first 14 days of the contract and usually occurs after the home inspection has been resolved. Once the buyer’s lender orders the appraisal, a third party professional appraiser will pick up the order and schedule the appraisal with the listing agent. From the order date, the appraisal process will typically take 7-10 business days depending on the demand of the current real estate market.
What happens if the home doesn’t appraise?
There are three potential outcomes in the event of a low appraisal:
- The seller can reduce the purchase price to the appraised value.
- The Buyer can pay the difference between the appraised value and the purchase price.
- The buyer and seller can meet in the middle, and renegotiate the terms of the contract as needed. For example, the seller could contribute less to closing costs, and lower the sales price by that amount with the buyer making up the difference.
To learn more about the appraisal process and how the Living TN team will guide you through it, give us a call at (615) 933-1000 or send us an email at info@livingTN.com!