By Sabrina Maas, Mortgage Loan Officer
Congratulations! Your offer has been accepted, the inspection went well, and you have received, reviewed and signed your loan disclosures. Now it’s time for the appraisal.
What happens during the appraisal process and what should you be mindful of?
Typically, the appraiser will contact the listing agent to schedule the date and time of the appraisal. The buyer(s) will be notified of the scheduled date and time once confirmed. There is no specific rule that says buyers cannot attend, but the process is typically handled by the appraiser alone.
For the most part, this is a hands-off process for both the buyer and seller. The financial institution that orders the appraisal will handle it, due to the fact that the appraisal protects the financial institution’s interests.
What happens during a home appraisal?
The appraiser will visit the property and compare it to recently sold homes to determine its value, take pictures inside and out, make necessary adjustments, and add recently listed homes to the report as well. If the home appraises at or above the agreed purchase price, the loan will likely move forward. If the home appraises for less than the contractual purchase price, the seller may have to lower the asking price. The buyer can back out, or choose to pay the difference of the appraised value and the purchase price at closing as long as they have the funds available.
What is the appraiser looking for?
The appraiser will examine both the interior and exterior of the home. The appraisal process actually begins before the appraiser even shows up to look at the property. They will have done their homework, and be prepared with a file in hand containing all kinds of market data and pricing information, including the comparable sales and the purchase agreement.
The appraiser uses sales data to understand the local real estate market, and how much homes are selling for in the area.
Appraisers will review the following:
Then, the appraiser evaluates what the house is worth in the current, local real estate market.
Reporting back to the lender
The appraisal report is a standard document which includes details regarding property condition, lot size, comparable sales, possible repairs needed and whatever else the appraiser uses during the appraisal process. And, of course, an actual “value” will be assigned to the house. This is essentially an educated guess about what the home is worth in the current market.
The turn around time from the date of the appraisal to the date the report is received is 3-5 business days.
Call Michigan First Mortgage at 877.312.9033 to speak with an experienced loan officer today!