Jeni VanOrnum | Real Estate Insights & Education

The appraisal is a crucial step that can make or break your home purchase. Here’s everything first-time buyers need to know.

What Is a Home Appraisal?

An independent professional assessment of a property’s market value, ordered by your lender to ensure they’re not loaning more than the home is worth.

Why Appraisals Are Required

Lenders need protection. They won’t loan $350,000 for a home worth $300,000. The appraisal confirms the purchase price is reasonable.

How Appraisals Work

The appraiser:

• Physically inspects the property (30-60 minutes)
• Measures square footage
• Documents condition and features
• Photographs the property
• Researches recent comparable sales
• Analyzes market conditions
• Writes a detailed report

What Appraisers Consider

• Location
• Square footage
• Number of bedrooms/bathrooms
• Lot size
• Condition and age
• Upgrades and improvements
• Recent comparable sales (within 1 mile, sold last 3-6 months)
• Market trends

The Appraisal Report

Typically includes:

• Property description
• Photos
• Comparable sales analysis
• Final value opinion
• Completion date: 7-10 days after inspection

What If the Appraisal Comes In Low?

This happens when appraised value is less than purchase price.

Your Options:

1. Renegotiate Price: Ask seller to lower price to appraised value.

2. Pay the Difference: Cover the gap between appraised value and purchase price with cash.

3. Meet in the Middle: Split the difference with the seller.

4. Challenge the Appraisal: If you believe it’s inaccurate, provide additional comparables to lender.

5. Walk Away: If your contract includes an appraisal contingency, you can cancel without penalty.

Example:

• Offer: $320,000
• Appraisal: $310,000
• Gap: $10,000

If approved for 95% loan, lender will loan $294,500 (95% of $310,000), not $304,000 (95% of $320,000). You need an extra $10,000 or must renegotiate.

How to Avoid Appraisal Problems

• Make reasonable offers based on comparable sales
• Include an appraisal contingency in your contract
• Have extra cash reserves
• Work with an experienced agent who understands market values

Preparing for the Appraisal

If you’re the buyer, there’s little you can do since you don’t own the property yet. Ensure the seller:

• Completes agreed-upon repairs
• Cleans and declutters
• Provides access to all areas
• Documents recent upgrades

I’ll Guide You Through

I’ll help you understand the appraisal report and navigate any value gaps. My comparable market analysis helps prevent appraisal surprises.