CHAPTER 18 What You Must Know About Appraisals
Waiting for a residential appraiser to evaluate your home is a white-knuckle time for home sellers and buyers, who depend on the appraisal to close the deal. A low appraisal can trigger an appraisal contingency in the contract for sale, which lets the buyer walk, or it can start the negotiating dance all over again. If you understand how appraisals work, you won’t lose (too much) sleep waiting for that number to arrive.
WHAT IS A RESIDENTIAL APPRAISAL
A residential appraisal is an evaluation of a home’s worth. Mortgage lenders insist on an appraisal to make sure the home can collateralize the loan. In other words, lenders want to know that the home is worth the loan the institution is making. But an appraisal isn’t science or merely mathematics. An appraisal is an opinion of what a property is worth. Appraisals costs $277 to $356, according to HomeAdvisor, depending on the size and location of the home. The lender usually hires the appraiser, and the buyer pays the fee upfront or at closing. A licensed or certified appraiser conducts the appraisal. Unlike a home inspector, who looks for defects that could cost the buyer money to repair or replace, an appraiser considers all the components of a home that make up its value. 90
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