When you buy a home, one of the many things you need to check off is hiring a professional to do a home appraisal to assess the value of your property. If the property’s listing goes off the market and for some reason is not sold, in short, you will have to pay an appraisal fee.
But what is a home appraisal?
A home appraisal is an assessment of how much your property is worth, not only for the property itself but also for your home contents. If you don’t pay for your house in cash, this is a non-negotiable process, but your house is your security. Most mortgage lenders require an appraisal before they grant you a mortgage. Your home is the mortgage lender’s collateral if you can’t pay so they will make sure to get as much money out of it as possible.
Property appraisals will also help you protect yourself from buying an overpriced property. An appraiser will take their time to look at the condition of the home and its sale price. It’s all tied into the appraisal cost, and it’s not just about the price of the property. The condition of your house and the quality of what’s planted in it becomes a factor during the appraisal.
This assessment is included in the appraisal report collected by the agent and presented to you when you first review the property. You can also compare it to other similar properties in the area to create an estimate of what you think it’s worth. This is best if your estimated value is higher than the cost of a house you wanted to buy, but make sure you can afford your mortgage loan from the start.
However, if your appraisal is below the price of the house, you have a number of options available, including negotiating, challenging the valuation, obtaining a second one or you could abandon the deal altogether.
Generally, you can expect to pay about $300 to $400 for a professional appraisal according to the National Association of Realtors (NAR).
However, there are some instances where sellers offer to pay the appraisal fee to make the deal more attractive. If the lender benefits from the report and selects an appraiser, the buyer pays the fee. Our advice? Either pay upfront or pay the surveying fee in the event of a failed deal.
Who’s Responsible for The Appraisal Fee When The Deal Doesn’t Go Through?
In most cases, the buyer will continue to be responsible for the appraisal cost and the closing costs of the failed sale. If the buyer does not pay the appraisal fee in advance and instead includes it in the remaining closing costs, the buyer is on the hook. If you have a reason the sale might go through you can ask for an appraisal contingency to protect yourself. If the seller does not take action and the lender arranges a loan to purchase the property with a value of $1.5 million or more, the payment is due regardless. The buyer must pay an appraisal fee, but it must be completed when lenders grant the loan, and there’s nothing a seller could do about it.
Selling a home is usually a nuisance to both the seller and buyer, but think for a moment whether an appraisal could protect the buyer from the much greater financial burden associated with buying an overpriced home. It is also a little insulting that you may have to pay more than you paid to buy the property because of the appraisal fee. Overall, the cost of finding the right house at the right price is a small price to pay.