Home Appraisals: 4 things sellers should know

Once you’ve made it past the home inspections period it’s time for the appraisal. The appraisal is a very important part of the process.

1. What is a home appraisal?

A home appraisal is a licensed or certified appraiser's opinion of a home's value. The appraisal is based on research of recent sales of comparable homes in the area, an analysis of the property and the appraiser's judgment.

The buyer’s mortgage lender will require an appraisal to help gauge risk of making their loan. A lender will hire a third-party appraiser of their choosing for an impartial opinion.

2. The buyer pays for the home appraisal

It is the buyer’s responsibility to pay for the appraisal. This fee is set by the lender, not the home appraiser.

If the buyer of your home is paying cash {meaning no lender is involved} then no appraisal is required. But the buyer might want to get an appraisal anyway to ensure they don't pay more than the property is worth. In that case, the buyer would choose the appraiser and pay the fee.

3. Appraisal timelines

Depending on the appraiser’s schedule, and demand in your market, the appraisal will happen about 3 weeks after you accept the offer. The report will then take 7-14 days to come back.

Note: As the seller you will not receive a copy of the report and you may not receive the exact value the appraisal comes in at. Generally the lender just lets us know if it came back “at value” or “under value”.

4. Appraisals are a leading cause of issues

As of June 2020, “appraisal issues” were the cause of 18% of real estate contract delays, second only to issues related to obtaining financing (37%) according to the National Association of Realtors (NAR). What’s more, appraisal issues were the cause of 9% of contract terminations.

Why might an appraisal come in under contract price?

1. The contract price is over market value

2. An appraiser finds an issue with the house that impacts its value

3. The appraiser was inexperienced or doesn’t know the area

A low appraisal doesn’t mean your deal is over. If you encounter issues during the appraisal process be sure to use your real estate agent to your advantage. Your agent has experience keeping deals together and can negotiate with the buyer.

Bottom Line:

Once you’ve completed the appraisal portion your next step should be closing day!