How appraisals shape your loan.
The appraisal protects the lender's collateral and, indirectly, the buyer from overpaying. It is separate from the inspection, which evaluates condition.
Direct answer
An appraisal is a licensed opinion of a property's market value used by the lender to size the loan. If value comes in low, buyers can renegotiate, bring more cash, or dispute.
Key takeaways
- 01
Appraisals estimate value; inspections evaluate condition.
- 02
Low appraisals can be renegotiated, bridged with cash, or challenged.
- 03
Refinance appraisals may be waived on qualifying files.
How value is set
Appraisers use recent comparable sales and adjustments for differences to arrive at a supported opinion of value.
When appraisals fall short
Options include renegotiating price, contributing additional cash, or ordering a reconsideration of value.
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Frequently asked
Who orders the appraisal?
The lender orders it through an independent management company; the borrower typically pays the fee.
Can appraisals be waived?
Certain refinance and low-LTV files may qualify for appraisal waivers.
How long is an appraisal good for?
Validity depends on the program; loans that don't close in time may require an update.
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