The appraisal is ordered by your lender to substantiate for the lender that the home is valued the price you agreed to pay and that home meets the loan guidelines. Typically the lender reaches out directly to the listing broker to visit the property. Once the appraisal gets turned in to your lender, you lender should let you know if the appraisal price is at or above your sales price and it meets the loan guidelines. You can get a pretty good idea about loan guidelines are ok as long as the home does not have:
- Peeling paint on the outside.
- Missing outlet covers
- Missing stair rails
- Any safety or trip hazards
- Any broken windows
If the appraisal comes in below the sales price, unless the seller lowers their price, you would have to come up with the difference in cash. This is another point of negotiation that takes place between you and the seller.
The lender required repairs I just mentioned are also negotiable.
I had one buyer that got VA financing on a home that had most of the repair issues I mentioned. But the seller was offering the home strictly as is. So the way we worked it out, the buyer agreed to do the repairs so it passed the appraiser and that buyer got a great home on 7 acres with a barn for under $300,000. Seller did not have to do any repairs and both were very happy.
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