One of the most frequently asked questions our loan officers at Ruhl Mortgage receive is “When is the appraisal?” Followed closely by, “What happens if the home appraises for more than the purchase price?” These are great questions and we often find the confusion is with learning that an appraisal is not actually a true valuation of the home, but more to validate the loan for the lender.
Most homebuyers are shocked to learn this and can be frustrated when the value of the appraisal may not be what was expected. This realization tends to lead to a very interesting discussion with the buyer about the appraisal, and the appraisal process. Your agent should explain that the appraiser gets a copy of the purchase contract. By law, the residential real estate appraiser has to receive a copy of the executed offer prior to the valuation process commencing. This then gives them the lowest number they would need to value the home at in order to substantiate the financing of the new home.
The role of an appraiser is not to provide an open market valuation of the subject home. If you have home valuation concerns and questions, those are best directed at your real estate agent who can provide you with customized reports such as a comparative market analysis (CMA) that shows sold data on properties similar to yours.
As always, our goal is to simplify the mortgage process, and that includes clarifying the steps of closing preparation. However, to get an accurate home value assessment, talk with your real estate agent prior to the appraisal. A great closing experience is had when there is an understanding of what the various vendors do throughout the closing process of a transaction, and no one knows that better than your Realtor.