You're Buying a Home with a Loan
The Bank Requires an Appraisal.
You found the home you want to buy. You and your Realtor review the comparables and you decide the price you'd like to offer on the property. The offer is submitted and the seller accepts. Fantastic! Now what?
If you're obtaining a loan, the bank will require an appraisal.
The goal is for the appraisal to come in at the contract price. If it comes in higher, it's interesting but doesn't affect the transaction. It may make you feel good to know you have some built in equity right out of the gate.
What if the appraisal comes in low? Then what happens?
- The seller may ask that the buyer bring cash to the transaction to make up the deficit.
Buyers don't usually love this option.
- The buyer may ask the seller to reduce the price to the appraised value.
Sellers don't usually love this option.
- The lender and agents will work on providing compelling information to challenge the appraisal.
Appraisers are not often fans of this approach because their work is being questioned and no one likes that. That's not to say it can't be successful, because it can.
What often happens is a dance of sorts between the buyer and seller and they meet in the middle.
In one situation, I had buyers who wanted to bring in the whole difference of $10,000. I had to convince them to allow me negotiate. They were worried the seller would cancel. The seller cannot kick a buyer out of a transaction unless the buyer has failed to do something they've contractually promised to do.
As a matter of practice, the listing agent or the buyer's agent should be present at the appraisal. Whichever one I am, I want to be there. Showing up matters.
Appraisers don't really want a Realtor in their ear, but when the Realtor offers useful information that saves the appraiser time or provides additional insight, it's a good thing.
The Realtor can provide specifics about recent sales in the neighborhood as well as information about the HOA if there is one. The appraiser may want to know if there's litigation of any kind, the percentage of owner occupancy or delinquency rate on HOA dues, if any.
The information the Realtor would provide would be something like:
On this date and time, I called the HOA and spoke with so and so who stated the following....
Every piece of a transaction must be managed in a way that is of benefit to the client. The details matter and it's imperative to have a Realtor who takes special care to look after these things for you.
Interested in buying or selling your Orange County, CA home?
Contact me today to get started!
JILL MURTY | 949.355.5321