The Appraisal and the Sales Contract

Real Estate Agent with Monument Sotheby's International Realty

When there is financing for a contract, there will more than likely be an appraisal required by the lender. Contracts in 2020, 2021, and early 2022 may have had addenda where buyers agreed to make up the differences due to buyers agreeing to prices higher than asking should the home not appraise. These addenda are not as likely now due to shifts in the market due to increased interest rates which means that sellers must incorporate the possibility of whether the home will appraise into their strategy.

Among the questions sellers should be asking potential agents when listing their property, is how the listing agent handles the appraisal process.

Handling the Appraisal-

1) The listing agent should provide information specific to the property, at a minimum leaving a package for the appraiser at the property, but if possible meet the appraiser at the property.

Information that should be provided to the appraiser -

- Comps that are within 180 days, with an emphasis on comps within 90 days. It is best that there are explanations about what the agent knows the differences are in the subject property vs. the comps. If for some reason, there are not good comps, particularly in the case of waterfront or other unique properties, comps that are older should be provided, at least as supplemental information and perspective

- Information about the homeowners or condo associations such as the fees, what is covered by the fees, community amenities. The appraiser will want to know if parking is included, or in waterfront communities, is a slip deeded to the property. Even though the lender will probably require a questionnaire be completed for condos, it is good to be able to provide information to the appraiser about the health of the condo association whether there are additional assessments, reserve levels and whether reserve studies have been done.

- Lists of improvements to the property - and it is good to provide costs for substantial improvements

-Information should be provided that explains whether there were multiple offers - yes, within limited inventory multiple offers are still common in Southern Maryland as well as other areas- level of interest such as how many showings within how many days, inventory in the community

2) Lenders do not choose the appraiser, but instead put in an order for the appraisal and then an appraiser is assigned.  The buyer also does not choose the appraiser and a specific appraiser can not be requested.

Lenders can not influence the appraiser. The lender will contact the buyer agent, who subsequently notifies the listing agent as to whether the appraised value is sufficient for the contract. The lender does not provide the appraised value to the listing agent if it is sufficient or exceeds the contract price. If the value is less than the contract price, the buyer can choose to pay the difference, or they can ask the seller to sell the home at the appraised value or request a negotiation of the sales price.


Sellers will be able to use this information as a guideline to know what to anticipate with regard to the appraisal process and what they will want to ask when selecting an agent.