FAQ's: Step 8 to Finding Your Home: The Appraisal

By
Real Estate Agent with Evers & Company Real Estate, Inc. AB95346

If you plan to get a mortgage to buy your home, your lender will insist upon an appraisal to ensure that your home is worth what you are paying for it.  This is not a form of consumer protection to make sure you are not paying too much, but an effort to protect the bank's interests. The lender usually puts a lot more money into the home that the buyer does!

Most of the time, my clients have appraisals at or even a bit higher than the sales price.  But every once in a while, one comes in at a number lower than the contract price. 

And then it all hits the fan.

First, the other agent and I look at the appraisal itself.  If there are obvious mistakes that have lowered the price, we can ask the lender to appeal the results to the appraiser.  Sometimes that works, ans sometimes it does not.

For a buyer, a low appraisal isn't the end of the world.  There will be a lot of pressure on the sellers to lower the price to the appraised value - not a bad thing if you are buying.  If they do not, you can walk away from the contract with your earnest money deposit. 

But if you don't want to walk away?

If the sellers won't lower their price, you may have to increase the amount of your down payment in order to complete the transaction. 

A few months ago, I had a transaction where the appraisal was low, and the seller refused to lower his price by a few thousand dollars to make the deal work.  The buyers felt all along that they might be overpaying for the house, so they decided to move on.

But it had a happy ending, though not for the seller .  The buyers just settled on another home, and the stubborn seller's house is still on the market unsold. 

The good news is that once the appraisal is successfully completed, there isn't a whole lot more that can go wrong.  Or can it?

Stay tuned for #9!

 

If you are planning a move to or from the Washington, DC area, I can help!  I am licensed in the District of Columbia, Maryland and Virginia.  You may call, email or text me at: 

Housepat@mac.com, 202-549-5167

SEARCH ALL LISTINGS IN THE DC METRO AREA

CHECK OUT MY LATEST BLOG IN THE WASHINGTON POST!

 

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Topic:
Home Buying
Location:
District of Columbia District of Columbia County Washington
Groups:
Diary of a Realtor
BananaTude
Tags:
appraisals

Comments 9 New Comment

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Rainmaker
246,885
Paula Swayne
Realtor-Land Park, East Sac & Curtis Park -Dunniga
Dunnigan, Realtors, Sacramento (916) 425-9715

Hi Pat~

I recently was at a seminar where a Realtor shared her solution to the appraisal crap shoot.  She "interviewed" the appraiser when he/she called.  How long have you been appraising; how many homes in this neighborhood have you appraised; where are you from, etc.  If she didn't like the answers, she refused to allow the appraiser access to the house, called the lender and asked for another appraiser.  Interesting, huh?

Paula Swayne

June 04, 2012 10:35 PM
Rainmaker
1,574,649
Lou Ludwig
CRB, CRS, CIPS, GRI, SRES, TRC, e-PRO
Ludwig & Associates

Pat

Informative post on the in and outs of the appraising process.

Good luck and success.

Lou Ludwig

June 05, 2012 09:17 AM
Rainer
276,566
Steven Cook
- Pierce, King, Kitsap, Thurston, Mason Counties

Patricia -- (et.al.) -- just as a comment in response to Paula (#5).  Although it might not be strickly against the current rules for appraisal assignments, it may be skating on very thin ice, and could be a problem is one were to reject many appraisers.

June 05, 2012 11:05 AM
Ambassador
1,802,234
Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

This is a great explanation of the appraisal process and what can happen if it comes in low.

June 05, 2012 12:18 PM
Ambassador
1,652,542
Barbara-Jo Roberts Berberi
Palm Harbor Florida Residential Real Estate
Charles Rutenberg Realty

Another great post, Pat! I have suggested this for a feature!

June 05, 2012 12:41 PM
Anonymous
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Patricia Kennedy

For Your Home in the Capital
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Additional Information

Pat Kennedy -- author of The Irreverent Guide to Real Estate -- gives you a look at life on the streets as a real estate broker in our nation's capital. And her blog is peppered with great advice combined with humor!