What Does A Real Estate Appraisal Mean to You, The Buyer?
Introduction
Your personal approval is accomplished early in the loan process, but final loan
Commitment usually hinges on a satisfactory
Appraisal. The bank wants to be sure its investment is covered in case you
Default on the loan. If the property appraises lower than the sales price, the loan might be declined, but that isn't the only obstacle it must pass. Other facts on the appraisal can be a problem, too:
- The bank probably won't like it if the estimated time to sell the property is longer than the area average.
- If the appraiser notes that entry to the property is from a private, shared road the bank might want to see a road maintenance agreement signed by everyone who uses the road, verifying that maintenance is shared by all parties.
Those are just a few examples of negatives that could stall your purchase. The
Lender will study the
appraisal carefully before determining whether or not the property qualifies to serve as
Security for your loan.
An Appraisal Isn't a Home Inspection!
Appraisers make notations about obvious problems they see, but they are not home inspectors. They do not test appliances, look at the roof, check the chimney or do any other typical
home inspection tasks. Never count on an appraisal to help you determine if the home is in good condition.
If the Appraisal Comes in Low
If the appraisal comes in lower than expected, don’t get upset. There are often steps you can take to make the deal work. If the appraisal uncovers other problems, remember that most problems are correctable. Try to keep your cool and work through issues one step at a time.
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