A home appraisal determines the estimated market value of your soon-to-be property. The appraiser evaluates it based on general condition, geographic location, proximity to objects of interest, value of the nearby houses, recent sales, and neighborhood growth and potential, among other factors. Mortgage lenders require this information to make sure the amount you borrow is supported by the home’s value. There’s always a risk of a low appraisal. In that case, the lender won’t go through with the transaction at that price or will ask you to add more money to the down payment to qualify for the loan. The seller might adjust the sale price accordingly, but also might not. Appraisal value isn’t a binding figure — what the seller sells for and the buyer pays determines the sale price. The situation might be that you negotiated a deal with the seller for a price already lower than initially wanted. This is due to the home selling in a buyer’s market and its location in a declining market area. This may slow or disrupt the closing process while further negotiations are conducted.
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