There are plenty of things to worry about when you’re trying to buy a home, and the appraisal is often a concern for the majority of buyers. One of the reasons that the appraisal is such an issue is that it’s crucial to the purchase of the property. If the home doesn’t appraise high enough, the lender won’t provide the loan. As such, the home appraisal process is often confusing and misunderstood, because buyers generally don’t really understand what all goes into it. The more you know about the process, though, the more you can dispel the myths that surround it and feel more comfortable when your lender says they will be getting an appraisal on the property.
1). Can you buy a home without an appraisal?
If you’re paying cash for your home and not getting a mortgage, you can certainly purchase your home without an appraisal. The reason so many people insist that an appraisal is required to buy a home at all is because most people need a mortgage. For those who pay cash, though, there’s no lender to care what the house is worth or whether you’re paying more than you “should” be for the property. In those cases, you can simply buy the property you like for a price you and the seller agree on. When there is a lender involved, though, there will need to be an appraisal or you won’t be able to proceed with your mortgage loan and get your real estate transaction to the closing table.
2). Does the appraiser work for the lender?
The process of buying a home is a big deal, and you want to work with people you can trust. Still, you won’t be able to just go out and hire an appraiser for the home you want to buy. The seller won’t have the option to do that, either. While the appraiser isn’t employed by the lender, the lender will be the one who hires the appraiser (or the appraisal company) to go take a look and report back to them. That’s generally not a problem because the appraiser is a neutral third party. They will provide information to the lender, and you’ll be told if the house appraised high enough, but you won’t really have an opportunity to get involved in the process in other ways.
3). Should you talk to the appraiser?
Your lender will require an appraisal to make sure the money they are loaning you for a home is backed up by the value of that home, in order to protect their investment. The appraiser will come and do their job, and you may or may not be told what day the appraiser should be there. As the buyer, you don’t want or need to go talk to the appraiser. It may seem tempting, but you could prevent the appraiser from doing their job as effectively as they otherwise could, and that could mean that you don’t get a high enough appraisal value on the home you want. Appraisers are professionals, but anyone can overlook something if they’re distracted, and an oversight could be detrimental to you. Waiting for the lender to let you know how the appraisal went is the best choice.
4). What can your real estate agent do to help?
Your real estate agent isn’t going to be a lot of help, mostly because they get very little opportunity to interact with the appraiser, either. How much interaction they get will generally depend on the how open the lender is about what day and time the appraiser will be there. If the agent knows when the appraiser will arrive, they may arrange to be there at that time to walk through the house with them. In some cases, though, there is a schedule conflict or there isn’t enough advance notice for your agent to be there. The appraisal will still take place, and the lender will contact your agent when they get the results. Then you can find out if everything went all right, or if there was a problem with the appraisal.
5). Should you ask for a second opinion?
The stress that you have when you purchase a home can be very frustrating, and that stress will only grow if the house doesn’t appraise for the purchase price. In that case, it’s important to consider what you’ll do. Some buyers ask for a second opinion, and will need to pay for a second appraisal. Whether your lender will work with you on that depends on the lender and the other factors of the deal. You can certainly ask about a re-appraisal, though, especially if you think the appraiser has missed something that could be crucial to the value of the house.
6). Will you be able to close if the appraisal is too low?
If you need a mortgage and the appraisal is too low, you won’t be able to close unless changes are made to the contract and the deal. For example, the seller could agree to lower the purchase price to the appraisal price. If you have extra cash on hand, you could also offer a bigger down payment so the amount financed would be lower. Without one or both of those scenarios taking place, though, the lender will refuse your mortgage and you won’t be able to buy the house unless you can get a different lender and appraiser to work with you on the deal. That’s worth checking into if you really want to buy the house.
2 Point Highlight
There are plenty of things to worry about when you’re trying to buy a home, and the appraisal is often a concern for the majority of buyers.
Your lender will require an appraisal to make sure the money they are loaning you for a home is backed up by the value of that home, in order to protect their investment.
