The home of your dreams is almost yours....the offer got accepted, the inspection went well and now for the appraisal! BUT, we have questions....
Who attends the appraisal?
The appraiser will be in attendance and the listing agent (if available). Unlike the inspection, Sellers do not need to leave the home while the appraisal is being done. In fact, sometimes the appraiser wants to know dates of when certain upgrades were done to add to their report.
How long with the appraisal take?
A conventional appraisal takes only about 30 minutes, as they measure the exterior, and portions of the interior and make notes on upgrades and features. If it is an FHA or VA appraisal, there are more items for the appraiser to check, and could take 45 minutes.
When will we hear what the value is?
The appraiser turns the appraisal into an AMC (Appraisal Management Company), which reviews it first, then it gets emailed to the lender. In most cases, the underwriter or quality control department want to review it prior to releasing any information to verify the information is correct. This can take up to a week after the appraisal has been done.
BUYERS - you will get the value information from the appraisal and a copy of the appraisal.
SELLERS - you will hear if the value came in under the purchase price, or if the appraisal came in at list price or higher. IF the appraisal came in higher than list price, you will not hear this information, only that it came in at value. (The buyer pays for the appraisal.)
If the price needs to be adjusted for the appraisal if it comes in UNDER purchase price, why can't we increase the price if the value comes in OVER the purchase price?
Wish this would happen! The bank won't lend the amount to the buyer if the appraisal comes in UNDER the amount, and only if the buyer offers to bring the shortfall to the table, most often the seller will need to reduce the purchase price. (This did not happen around Denver in early spring when there were 15+ offers received.) If the value comes in over the purchase price, the buyer will see a bit of instant equity.
What happens when the square footage is much different on the appraisal than what the listing agent disclosed?
If the appraisal has a significant amount of square footage LESS than what is listed in the MLS, there could be a problem with the value. Usually a listing agent bases their purchase price on like property with similar square feet. I once saw a home that had filed for a permit adding 350 square feet to the home, but never finished. This amounted in a very low appraisal! If there is more square footage, again, the buyer most likely will see instant equity!
The inspection and appraisal are the two largest hurdles in the transaction.