Updated: Sep 12, 2020
What is An Appraisal & Why Is It Necessary?
An appraisal is a report of value produced by an independent third party. By requiring that Buyers purchase an appraisal, Lenders are protecting their investment in your home by verifying that the value of the home is sufficient collateral in the event that you fail to make payments as agreed and the Lender needs to move forward with foreclosure.
Who Pays for an Appraisal?
Buyers are responsible for paying for the appraisal. When payment is due and how much it will be varies from Lender to Lender. Some Lenders require that you pay the appraisal fee up front before the appraisal is ordered, while others will allow you to pay this fee at closing.
The Lender will typically order your appraisal within the first week of the sale. At the Oregon Coast, there is a shortage of appraisers, which makes it important to order the appraisal as soon as possible. Once an appraiser has accepted the job, they will schedule an appointment to visit the house and will then produce a report of recent comparable sales to justify market value of a property. Buyers do not attend the appraisal appointment. The report will be submitted to the Lender, who will review it and approve of it. The Lender will inform us if the appraised value is sufficient to justify the sale price in the Sale Agreement, and will also note any conditions that need to be taken care of before closing. Conditions could include installation of smoke & carbon monoxide detectors, water heater straps, or any other physical concerns with the property that would prevent a Lender from moving forward with financing.
Because you paid for the appraisal, you have the right to receive a copy of it, so be sure to request a copy of the appraisal from your Lender. This is an important part of the documentation you’ll want to keep regarding your property purchase.