Just like what we discussed in our home inspection blog post, your home appraisal is a step in the buying and selling process, and something that takes place after a contract is signed by both the buyer and the seller, but before closing. A home appraisal is something your mortgage lender will require in order to prove that the home you want to buy is worth the agreed upon purchase price. A home appraisal is ordered by the buyer’s mortgage team, and the home appraiser is hired by them to assess the value of the home you want to buy, the neighborhood it’s in, and the homes that have recently sold in the area. Let’s take a deeper look at a home appraisal and how the home appraisal process works.
What is a Home Appraisal and What the is Appraisal Process?
How Home Appraisers Determine a Property’s Value
The home appraiser will consider several factors about a property, the physical structure, the land it sits on, and the immediate surrounding area to determine a home’s value. Some of these factors include: the condition of the home and its structure, square footage, number of bedrooms and bathrooms, the acreage of the lot, upgraded materials used in the home, and the average selling price and cost per square foot of similar homes located in close proximity of the home being valued.
What Happens After the Physical Appraisal is Complete?
Once the physical review of the property by the appraiser is complete, the appraiser can take up to a week to put together the home appraisal report. Most likely you, your real estate agent, and your mortgage lender will receive an electronic copy of the appraisal report including pictures of the property to be purchased as well as information on comparable properties used to help set the appraisal value.
In some cases, if the down payment you are going to make on the home is substantial enough in relation to the agreed upon purchase price, the appraiser might simply conduct a “drive by” review of the home. This is because the amount being financed is well below the purchase price of the home, and the mortgage company doesn’t require the same in-depth review of the home.
What if my Home Appraisal Comes Back Too Low?
If the appraisal report comes back with a value lower than the agreed upon purchase price, you as the buyer could decline to purchase the home, offer to pay the difference between the appraised value and purchase price, or renegotiate the purchase price with the seller. The seller also has the option to decline moving forward with the sale of their home.
What if my Home Appraisal Comes Back Higher than the Purchase Price?
If the appraisal comes in at a higher price range than what you agreed to in your purchase contract, consider yourself lucky! You can proceed with your purchase knowing that you not only got a good deal but have some instant added equity.
Most of the time, the appraisal will closely match the sales price.
Your Experienced Memphis Area Real Estate Agent
When it’s time to sell your existing home or buy a great new place, turn to a highly-regarded and well-informed local real estate agent. You want a real estate agent you can trust to guide you during both your home selling and buying process. Check out my other great articles to help you through your home selling and buying experience here in Memphis. Read about what a mortgage pre-approval letter is, what it means to stage your home for sale, and lots more!
Take a minute to learn more about me and how I can guide you with your house sale, new home purchase, or buying a great parcel of land. With over 15 years of top-notch service for my clients, I want to help you with the next step of your real estate journey. Contact me at (901) 828-8919 or drop me a quick note at email@example.com and we can speak in person about your plans and options. I look forward to speaking with you today! Ask me about seeing homes for sale by video or virtual tour and find the best place for you!
Angie Kelley, Crye-Leike Realtors
(901) 828-8919 or (901) 756-8900