Appraisal
Every lender who uses a property as collateral for a loan wants to know value of the property. So they order a professional appraisal.
The appraisal is chosen by a clearing house - not the lender, not the buyer, not the agents, not the title company.
Government realtors set up the clearing house process in hopes of getting unbiased appraisals. Sometimes this means one gets an appraiser not really familiar with the area. (John once had a call from an appraiser seeking directions from San Antonio!)
We can't reach out an appraiser to influence the appraisal. But an appraiser is allowed to contact us seeking comparable sales data. This allows us to share local market knowledge - like the tone-deaf ACDC cover band that practices all night next door to the much lower comparable sale at the other end of the street.
Usually a house will appraise for exactly the amount of the contract. That is because all the lender asked was if it is worth that much?
The appraisal will be reviewed by the mortgage underwriter. The underwriter can question a value used in the appraisal. When there is something specific like a swimming pool, the appraiser might go above the contract price. This is just a way of telling the underwriter there is plenty of evidence of value. Don't argue that the pool is worth $5,000 less.
Two appraisals areas that lead to more negotiations:
There might be lender-required repairs. These are usually pretty obvious. The appraiser is not as thorough as the home inspector. But if the stove doesn't work or there is a big hole in the roof it will show up. Someone will have to complete the repair before the lender will deliver the money. So we have to work out who or how it will be split.
The value might come in low. In that case the seller can lower the price. Or the buyer can make up the difference in additional down payment. Or we reach a compromise somewhere in between.
The appraisal is chosen by a clearing house - not the lender, not the buyer, not the agents, not the title company.
Government realtors set up the clearing house process in hopes of getting unbiased appraisals. Sometimes this means one gets an appraiser not really familiar with the area. (John once had a call from an appraiser seeking directions from San Antonio!)
We can't reach out an appraiser to influence the appraisal. But an appraiser is allowed to contact us seeking comparable sales data. This allows us to share local market knowledge - like the tone-deaf ACDC cover band that practices all night next door to the much lower comparable sale at the other end of the street.
Usually a house will appraise for exactly the amount of the contract. That is because all the lender asked was if it is worth that much?
The appraisal will be reviewed by the mortgage underwriter. The underwriter can question a value used in the appraisal. When there is something specific like a swimming pool, the appraiser might go above the contract price. This is just a way of telling the underwriter there is plenty of evidence of value. Don't argue that the pool is worth $5,000 less.
Two appraisals areas that lead to more negotiations:
There might be lender-required repairs. These are usually pretty obvious. The appraiser is not as thorough as the home inspector. But if the stove doesn't work or there is a big hole in the roof it will show up. Someone will have to complete the repair before the lender will deliver the money. So we have to work out who or how it will be split.
The value might come in low. In that case the seller can lower the price. Or the buyer can make up the difference in additional down payment. Or we reach a compromise somewhere in between.
