The appraisal is part of the escrow process. When you go to buy a home, your mortgage lender will want to know whether the house you are interested in buying is worth the amount you are willing to spend. It seems bizarre to many new buyers, but though you have already made an offer denoting a value for a home that makes sense to you, and your seller has agreed to that price, banks need independent confirmation that the home is in fact worth what you are paying for it.They need to check out the house for anything that can devalue or increase the property’s worth.
Who Pays For This?
Sadly, you do. The cost of appraisal is part of your closing costs, those extra thousands of dollars you pay to get your loan. In most cases, appraisal is less than $500, but if you prepare for a range of $300-$900, you won't (hopefully) be shocked by whatever your fees turn out to be.
Problems to Prepare For
If an appraiser is unfamiliar with the current market conditions, he or she may not agree with the value of the home written into your offer.Appraisals generally lag market conditions and some changes to the appraisal process have caused difficulty in the lending process. If your value and the appraiser's do not match, you and your seller will have to go back to the negotiating table, because your bank will not approve your loan.
