The Appraisal Process in Home Buying

Buying a home can be a multifaceted process with many important steps to take. You may have already looked at several homes before finding the right one. Then you may have already submitted a purchase offer. After one or more counteroffers, the offer has finally been accepted.

There are still several steps necessary to finish the home buying process, which must take place to satisfy the conditions of the purchase agreement. The first of these steps is getting the appraisal done. In most cases, the lender will only loan about 80% – 90% of the value of the loan. The home buyer must come up with the balance, called the down payment. Some types of loan may allow the lender to lend 100% of the appraised value. However, the key to this is still the appraised value of the property.

A licensed real estate appraiser performs the appraisal service. Appraiser will assess the property using a complex set is criteria to arrive at the appraised value of the property. Technically, this value is just the opinion of the appraiser of what the property is worth, but the result of the appraisal is king when it comes to getting your home loan. If the property appraises for less than the purchase price, then you will have decisions to make. The bank probably will still loan you the money, but only a percentage of it. You can still buy, but you will have to make up the balance some other way. Alternatively, allow the purchase agreement to lapse and keep looking at other properties. If the purchase agreement lapses because the property did not appraise to the purchase price, the buyer’s money should be refunded.

If the property does appraise at value, the contract moves forward with the other conditions stipulated in the agreement. Still needed completion for closing is the home inspection and title search.

The appraisal is the most important condition that must be met in the contract agreement. It can make or break the deal, depending upon the results. However, once the property appraises, you are well on the way to closing

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