An appraisal fee covers the cost to have an appraiser estimate a home's market value. The fee is usually paid by the buyer unless they negotiate for the seller to pay it. Although it's usually the lender that requires an appraisal, the process also benefits buyers and sellers.
What happens if appraisal is lower than offer?
If your appraised value is lower than the agreed upon sales price, you'll have to make up the difference in cash, or cancel the deal. There's no reason to panic if your appraisal comes in lower than you expect it to, though.
What negatively affects home appraisal?
This includes things like asbestos tile and insulation and lead paint. Even if the materials are safe, if they haven't been updated, your home may not be as energy-efficient, which could also affect value. This is especially true for old windows and doors.
What if appraisal is higher than offer?
If the appraisal is below or above the asking price, the transaction can get delayed or fall apart entirely. If a home is appraised to be higher than the asking price, the lender will only issue a mortgage for the appraisal amount.
How do you calculate appraisal cost?
To calculate an appraisal cost, multiply the appraisal amount by the fee percentage.
How important is the appraisal when buying a home?
If it is a purchase-and-sale transaction, the appraisal is used to determine whether the home's contract price is appropriate given the home's condition, location, and features. In a refinance transaction, the appraisal assures the lender that it isn't loaning the borrower more money than the home is worth.