Appraisal Process

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  • #68423
    tdm27603
    Participant

    So let’s say I sent a home offer for 100K. Seller approves and we sign the p&s.

    Question 1 : do I do the appraisal before I sign? Or after?

    Question 2: if the appraisal comes back the home is worth 90k, will boa give me 90k or 100k?

    I’m really just confused on why p&s is done before an appraisal and inspection.

    #68425
    azallin
    Participant

    The bank orders the appraisal after you have a signed contract. If the appraisal comes back lower you’ll have to renegotiate with seller or come up with the extra 10k. The bank is not going to lend you more than the home is worth.

    • This reply was modified 9 months, 1 week ago by azallin.
    • This reply was modified 9 months, 1 week ago by azallin.
    #68428
    azallin
    Participant

    P&S shows the bank you are serious about a home and is the start of the negotiation between you and the seller.

    #68430
    Nelsont
    Member

    You don’t do the appraisal at all. Neither does the seller. In fact any appraisal ordered by the buyer or the seller or anyone working in conjunction with either is considered a biased appraisal, redundant and a waste of money since it will not be used or considered in the loan underwriting. Bank of America orders the appraisal from a 3rd party and doesn’t tell you what company until after the appraisal report is underwritten and sent to you. This keeps the appraisal completely unbiased ordered by a 3rd party performed by another 3rd party (local appraisal company) with no interest in the sale.

    When you submit a ratified contract to your MC you will receive a system generated email from naca asking you to click a link and agree to terms. When you agree bank of America orders the appraisal.

    You cannot without exception get a loan for more than the appraised value. In this case you would have to lower your offer. The seller would also have to lower their asking price. This is a hard stop.

    In most states the contract is written in such a way that the offer is contingent upon the property meeting expectations and the buyer and seller agreeing to terms. At any point either the buyer or the seller can back out if certain criteria in the contract are not met such as too many required repairs. In some states like Massachusetts the inspection is done first the contract is more binding and harder to back out of because you already know what you’re getting into. Also in most cases the appraisal is usually pretty close to the asking price because listing agents know what they are doing and don’t want to artificially inflate the price.

    #68453
    tdm27603
    Participant

    Thank you for this great information.

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