As we move forward with the purchase, we attempt to stay calm and hope for the best, but the truth is: the Appraisal is probably the most nerve-racking step of the transaction for all the parties involved. I have experienced this feeling a few times. Although in a normal situation, I would say a couple of years ago, it still was a nail-biting period of days for both buyers and sellers.
But what is the Appraisal?
It is an opinion of value—a property valuation report, requested by your lender and prepared by a licensed Property Appraiser.
Sellers need the Appraisal to be higher, equal to, or as close as possible to the asking price. On the other hand, buyers can benefit from a lower appraisal value to negotiate the sales price.
But what happens in the case that the negotiation does not work?
Well, if you are being protected by an “Appraisal Contingency” (and we strongly recommend it) within your contract, you can easily cancel the contract and pick up your deposit; unless you are willing to pay above the appraised value and you want to continue moving forward.
Paying above the appraised value may be ridiculous, I would say, a waste of money in some cases. But if the house is located in an area where properties are increasing in value, it could be seen from the perspective of long-term gains. If you are on a budget, definitely do not go for that.
Nowadays, we are seeing appraisals coming lower and sellers asking crazy numbers for the homes. For this reason, now buyers are the ones wishing the numbers to come back equal to the asking price or as close as possible to benefit from the financing and avoid having to put cash on top.
Our advice is, do not get desperate. Let the home go if the price you are looking at makes you nervous. In the meantime, continue saving your energy and money. The right home for you will not make you feel uncertain. On the contrary, it will make you feel ready for the taking.
