How Home Appraisals Effect The Real Estate Closing Process

TL;DR

Home appraisals determine the market value of a home and can affect the financing process, making them crucial in the real estate closing process.

Transcript

When you are buying a home, whether you're going to live in it, or it's going to be an investment property, you almost always have to have an appraisal. So let's talk about how that affects the real estate closing process as a whole. I'm Tiffany Webber. And I am a real estate attorney in the Lake Norman area Of North Carolina. And we put out videos... Read More

Key Insights

• 👪 Appraisals can determine whether a buyer can proceed with a home purchase or not.
• 😘 Low appraisals may require buyers to adjust their down payment or renegotiate the purchase price.
• ❓ In a competitive housing market, buyers may include appraisal addendums in their offers to assure sellers of their commitment to the purchase.
• ❓ Lenders choose appraisers to ensure accuracy and avoid potential conflicts of interest.
• 🥰 Appraisals are both an art and a science, requiring expertise in determining a home's market value.
• ⚾ The timing of appraisals can vary based on scheduling constraints.
• 🛟 Appraisals serve the interest of lenders to ensure the investment aligns with the property's worth.

Questions & Answers

Q: What is the purpose of an appraisal in the home buying process?

An appraisal determines the true market value of a home, ensuring that the agreed-upon price aligns with the actual worth. It helps lenders decide whether to approve a loan and how much they are willing to lend.

Q: Do buyers have to share their appraisal report with sellers?

Buyers are under no obligation to share their appraisal report with sellers. While it is common for sellers to inquire about the appraisal, buyers can keep this information private if they choose.

Q: Can a low appraisal affect a buyer's ability to purchase a home?

Yes, if the home's appraisal comes in lower than the agreed-upon price, the lender may offer a smaller loan amount. In such cases, the buyer would either need to make a larger down payment to bridge the gap or negotiate with the seller to lower the price.

Q: Who chooses the appraiser for a home?

The lender typically selects the appraiser for a home. While buyers can choose to have a separate appraisal done, lenders rely on their chosen appraiser's report to determine the loan amount.

Summary & Key Takeaways

• Appraisals determine the actual value of a home in the market, ensuring that the agreed-upon price between the buyer and seller aligns with its worth.

• Appraisals are essential because they can influence whether a buyer can secure a home loan or need to adjust their down payment amount.

• Appraisal addendums are increasingly common in the current competitive housing market, allowing buyers to bridge the gap between the contract price and the appraised value without renegotiating.