Fridays with the Fiddle Fig: Appraisals
This week's topic: Appraisals
Who pays for it? Is it required? What happens if it comes in above or below value? Who does it?
Who pays for it?
It's typical for the buyer to pay for the appraisal. It is paid upfront to the lender when first going into escrow so that the lender can then go and order the appraisal to be performed.
Is it required?
Rarely is it not required. There have only been very few times that we have ever seen it not required and it was because the buyer was able to put down a very large downpayment.
What happens if an appraisal comes in under or over value?
If the appraisal comes in below value (ie you're in escrow at $525,000 and the house appraises for $500,000) then there are four different options. One option is that the buyer decides to pay the difference, the seller can decide to reduce the purchase price and match the appraised value, both the buyer and seller can agree to meet in the middle, or the buyer can move on and cancel escrow.
If appraisal comes in high then that means your new home is already worth more than what you paid for it. High five!
Who does an appraisal?
There is actually a California appraisal license required for anyone who performs an appraisal. An appraisal has to be done by a licensed appraiser.