Appraisal process for buyers
Lenders order an appraisal to confirm value for the loan. Here is what happens, why it matters, and how to respond if value comes in below contract.
What an appraisal does
- Confirms market value for the lender based on recent comparable sales.
- Checks condition items that may affect loan approval and insurance.
- Supports the loan to value that sets your rate and mortgage insurance.
If value comes in low
- Review the report and the comparable sales with your agent and lender.
- Request a reconsideration with better comparable sales when justified.
- Renegotiate price, add cash to close, or use an appraisal gap plan if agreed in the contract.
How to prepare
- Have your agent provide a neat packet of upgrades and the most similar recent sales.
- Confirm access and working utilities so the visit is quick and complete.
- Time sensitive loans benefit from early ordering after inspections.