Buying a Home · Straight answer from Kathleen
What is an appraisal?
An appraisal is an independent estimate of the home's market value, ordered by your lender to make sure the loan amount is justified. It matters because the lender lends against the appraised value, not the contract price.
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- What happens if the house doesn't appraise?
The appraiser looks at the home and the comparable sales, very much like the value analysis your agent does, and issues a number. If it comes in at or above the contract price, the loan proceeds normally. If it comes in low, the gap is the problem.
When a home appraises below the contract price, the options are a price reduction, a larger down payment from you, or the seller and buyer meeting in the middle. An appraisal gap can also be negotiated up front in an offer.
This is one of the reasons strong buyers get their agent to check the comps before offering: a price that cannot appraise is a deal risk, not just a negotiation point.
On the North Shore
In fast-moving North Shore markets, homes can sell for prices that outrun the available comps, which is when appraisal gaps happen. Knowing your market's recent sold evidence keeps your offer inside what the appraisal is likely to support.
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Buying a Home
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