The Appraisal Process Of Buying A Home

The Appraisal Process Of Buying A Home

Buying a Home: The Appraisal Process


If you’re going to have a mortgage on your property, this applies to you.  If you’re paying cash for your property, this doesn’t apply.


95% of all Home Owners here in Arizona obtain financing and this information will apply.


The Mortgage Company you are using to obtain your loan will require an appraisal.  An appraisal is the “Current Market Value” of your new home.  The bank wants to make sure they are not going to give you too much month for a home that is worth less than the desired loan amount.


Your lender will order the appraisal, which typically costs around $450.  Depending on the appraiser’s schedule and your loan type, it may take up to a couple of weeks for your lender to receive the completed appraisal documents.


If the appraised value of the home comes in at, or above, the asking price, the loan will move forward.


But, if the appraisal comes in BELOW the asking price, what do we do?


Per the contract, we will have five days to come to a conclusion.


If this does happen, here are the steps I take:


Step 1: I will go to the Seller and/or Seller’s Realtor and tell them the home is not worth what we are paying for it and inform them that they need to reduce the price to the appraisal value.  Sometimes this work, and sometimes it doesn’t, but it’s always where I start and what I fight extremely hard to accomplish.  I represent you, and I don’t want you to have to pay any more money!


What if the Seller refuses to reduce the price?

- They could either refuse to reduce the price or ask to meet somewhere in the middle.  If the seller doesn’t reduce the amount to the appraisal price, you (as the Buyer) would need to make a decision.


We would then sit down, look at every option, and make an informed decision what is best for you and your family.  We can move forward with the deal, or we may be able to cancel the contract and start searching another home.  You won’t know until we fully assess the situation, but I will make sure you have the information you need to make the best possible decision.


If we decide to cancel the contract, you’re protected by the “Appraisal Contingency”.  Like I said before, you only have 5 days to come to a decision.  I don’t want you to stress about that though!  This is one of the reasons you have hired me.  I make sure we meet every time frame and make sure you’re not at risk.  You then get your Earnest Deposit back and we go find you another home.


Unfortunately, in this case, you do not get your appraisal or inspection fees back. ***IMPORTANT*** That’s why you hire a professional like me, we will run a value on the property before you place your offer and do everything we to avoid this situation before we even being the process!  Now I can’t control everything but we will do a lot of investigation first.


OK recap time (using the example of a $200K purchase price):


My Fee’s (AKA commissions) $0 - 100% FREE

Earnest Deposit $2,000

Home Inspection $350

Termite Inspection $80

Appraisal Fee $450


Total Out of Pocket Expenses: $2,880


These are the fees you will incur during the buying process.  Now,  there are other costs you will have like your Loan Down Payment and Loan Fees for example.  However, you will be given those, way before we even start looking for a home.  There are several zero down loan programs available here in Arizona.


If you have any questions at all, don't hesitate to reach out to me!


Joshua Smith Headshot
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Phone: 623-703-7445
Dated: March 24th 2017
Views: 273
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