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the HOME appraisal

Whether you’re buying a home using a mortgage, refinancing your existing mortgage, or selling your home to anyone other than an all-cash buyer, the HOME APPRAISAL is a key component of the transaction. The HOME APPRAISAL is the estimation of a home’s current market value.  A licensed APPRAISER completes this estimation, which is calculated by comparing the recent sales of homes in the area of the property that is being appraised.


When you’re considering buying a house, there are two sides to the story: the seller’s asking price and the actual value of the property. This is where an Appraiser steps in and conducts a home appraisal.

The Appraiser is a licensed and certified professional who determines the market value in the real estate industry. An appraiser is expected to act independently of the buying and selling parties in a transaction. Their professional opinion about the real and fair value of a home must be unbiased.

The Appraiser is hired by the Lender once a purchase has been agreed on and a home loan has been applied for.
Lenders want to make sure that homeowners are not over-borrowing for a property because the home serves as collateral for the mortgage. It assures the lender that it isn’t handing the borrower more money than the home is worth. Should the borrower default on the mortgage and go into foreclosure, the lender will sell the home to recover the money it lent.

It often takes an hour or two to complete an appraisal, and you should receive the report within a few days. This amount of time can vary depending on the property size, report type, and other factors like a lender or bank review. The borrower usually pays the appraisal fee.


Residential Appraisals are used in purchase-and-sale transactions to determine whether the home’s contract price is appropriate given the home’s condition, location, and features. The home needs to appraise at or above the amount you want to finance for your loan to be approved. Appraisals are also commonly used in refinance transactions.

An Appraisal is a complete visual inspection of the interior and exterior of the house. Any conditions that affect the property’s value, such as home improvements, upgrades, additions, and needed repairs are evaluated and commented on by the Appraiser.

The appraiser looks closely at the structure, condition, and size, of the property. Lot size, type of driveway surface, and any car storage. The home’s square footage, number of bathrooms and bedrooms, remodeled versus updated kitchen/baths. Foundation type, materials used for the walls, floors, and windows, the roof surface, screens, gutters, and downspouts.

An upgraded microwave doesn’t add value, for instance, because it’s moveable. Neither does a utility shed or a hot tub.

The Appraiser will use recent sales of similar properties to compare the home’s amenities, the number of bedrooms and bathrooms, floor plan functionality, and square footage, as well as current market trends.
A property’s appraisal value is also influenced by external facts such as neighborhood characteristics census tract, neighborhood boundaries, public utilities available, and zoning. Other key factors that can lower your home’s appraisal value are if your surrounding area has experienced recent distressed sales.

the appraisal contingency

A standard real estate contract typically comes with a number of contingencies. A contingency clause defines a condition or action that must be met for a real estate contract to become binding.

An Appraisal contingency means that if your home doesn’t appraise for the amount you’ve agreed to pay, you can walk away from the deal with your deposit.

When the Appraisal value is lower than the purchase price on the contract, the lender won’t approve the loan and the transaction can be delayed or even canceled. In this situation, buyers and sellers need to come to a mutual agreement that will hold the deal together, or the buyer may decide to cancel the contract. In this case, the buyer is assured that if the contract is canceled, he can walk away without prejudice.

It’s tough to remain calm when it appears that a pending sale will fall apart, but both parties have options. You can dispute the Appraisal results or request a second Appraisal.

As a seller, a low Appraisal might mean that you have to lower your home’s price to get it sold. This will reduce your profit, but it will keep your home sale on track. If the buyer walks away, you can put the home back on the market and look for a new buyer expecting to sell for more, but there’s no guarantee you won’t receive a low Appraisal again.

As a buyer, it’s time to decide if you are willing and able to pay out of pocket to increase your down payment and get the same mortgage. You can also make up the difference between the Appraisal value and the sale price with cash at Closing. Or, you can negotiate with the Seller and meet in the middle which is usually the best decision for both buyer and seller.

Waiving the home Appraisal contingency clause is rare but there are exceptions. If there is a cash buyer who is able to purchase the property outright, an Appraisal contingency isn’t necessary. Waiving the contingency could also strengthen your offer and beat out the competition in a seller’s market where there are several offers on the property.