Appraisal FAQs

Question: What is an appraisal?

Dom’s Answer: An appraisal is an opinion of the value of a property by a licensed appraiser. It’s not a home inspection, where the report is on the condition of the property, rather than the value. The appraiser can, of course, order any inspections that they think will be helpful in determining the value. An appraiser will consider things like the quality and condition of the home, the square footage and acreage, the neighborhood it’s in (and the recent sale prices of surrounding homes), etc to determine their opinion of the value. The reason I say it’s an opinion is because the real value of a home is whatever the seller is willing to sell it for and the buyer is willing to buy it for.

Question: When do I order an appraisal and how much does it cost?

Dom’s Answer: Well, it’s a bit of a trick question. Once your offer has been accepted, your real estate agent will likely encourage you to schedule a home inspection ASAP. An inspection is optional… and it’s on you, as the buyer, to schedule. However, your lender is the one who orders the appraisal - they want to make sure the house is worth the money they’re loaning to you! You’ll pay the fee ($400 on average).

Question: How long does the process take?

Dom’s Answer: There are a lot of factors, including how busy appraisers are, how many are working in your area, and what kind of financing you’re getting. The lender will schedule the appraisal as soon as reasonably possible, and you or your realtor should encourage them to do so. It can often take a week or two to get an appointment, and then the appraiser has to conduct the appraisal and put together a report. For an average home purchase, this process can be finished within the 30 day window from the time the offer is accepted until the closing date. Ideally, the appraisal report is completed at least a week before closing so the lender can finalize the numbers and get your paperwork ready.

Question: How might an appraisal affect my purchase?

Dom’s Answer: There are a couple of possible scenarios. If the appraisal comes in higher than the purchase price, that’s a win for you as the buyer! The seller already agreed to sell you the property for x amount, and that’s all you need to pay. They will not even know that it appraised higher than the purchase price.

However, the appraisal could come back lower than the purchase price. If you’re getting a loan instead of paying cash, this could present a problem. The lender is not going to loan you more money than the home appraises for. So, if the home appraises lower than the purchase price, you have a few options. If your offer has an appraisal contingency, you can either renegotiate the purchase price or walk away from the deal and get your earnest deposit money back. If you still want to purchase the home (but the seller won’t negotiate or you waived your appraisal contingency), you’d need to come up with the difference in cash at closing.

For example, let’s say the purchase price was $350,000. You were originally putting down $35,000 and getting a loan for $315,000. If the appraisal comes in at $330,000 and you are still paying $350,000, that’s an additional $20,000 you’ll need to pay at closing.

If you have any questions, shoot me an email at dom@waterfrontbrevard.com or dquaglia@tyleryork.com. You can always reach out to me on Instagram as well.