Now it’s time for your lender to order the appraisal. You may be wondering what purpose the appraisal serves… you’re not the only one. To make a long story short, your lender orders the appraisal to ensure your home is worth the amount of the loan. You will pay for the appraisal, but you do not need to attend the appraisal.
The appraiser works for a third-party entity but is hired by your lender. They go through significant training to come up with the price they believe your new home to be worth. Their job is to ensure the home is worth the purchase price. Generally speaking, once an appraiser has proved that value, they do not tend to keep going. This means, the goal is that the appraisal comes in at the purchase price. It will sometimes come in higher and this provides you will some instant equity! It can also come in lower. Our job is to understand comparable home prices and not let this happen. Listen to your realtor. Understand your cap on an offer needs to match the market or be willing to walk away (purchase agreement allows for this) or negotiate one more time on the purchase price.
In the situation where the appraisal comes in lower than the purchase price of your home, there are a few options. These options will be reviewed with you by your realtor. This is another point of negotiation throughout this process. This situation will vary from transaction to transaction depending on the buyers and sellers situation.
For more information on appraisals, check out this great article. (https://www.realtor.com/advice/buy/before-you-buy-4-questions-home-appraisals)