If the buyer is purchasing the home with a mortgage, the lender will require that an appraisal be conducted.
So, what is an appraisal?
I highly recommend this article from the National Association of Realtors on Appraisals, filled with all of the answers you’re looking for.
Who orders the appraisal?
The buyer’s mortgage lender orders the appraisal, but the buyer pays for it.
When does the appraisal occur?
Usually during weekday business hours.
Do I need to attend the appraisal?
No, you will not attend the appraisal. The appraiser will schedule his appointment through Showing Time, and you will accept or decline via text.
How long does the appraisal take?
Usually for about 30 minutes.
How long until we know if the property appraised for the purchase price?
Usually a week to 10 days after the appraisal appointment. Once the appraisal report is written, the mortgage lender forwards it to the buyer to let the buyer know whether the property appraised at the purchase price, below the purchase price, or above the purchase price.
If the property appraised at the purchase price, nothing further needs to be done and the closing process will proceed. If the property appraised for less than the purchase price, we have a problem. The bank will only give the buyer a loan for the appraised value. In this case, the buyer will often ask us to renegotiate the purchase price down to the appraised value.
If we say no, then the buyer has to come up with cash at closing for the difference between the appraised value and the purchase price. Many buyers can’t or won’t do that. For instance: if the purchase price is $500K, but the appraisal came in at $475K and we will only agree to lower the price to $480K, then the buyer has to decide if he or she is willing to pay extra $5K on top of the down payment and closing costs, or walk away from the deal.
If the buyer walks away, his or her earnest money is usually refunded.