If the seller already has an appraisal, you will usually still need one that your lender accepts. In most purchase transactions, the key issue is not simply whether an appraisal document exists. It is whether the appraisal meets the lender’s requirements, supports the home’s value for the loan, and is acceptable for that specific transaction. In some cases, an appraisal waiver or another lender-accepted exception may apply, but buyers should not assume a seller’s appraisal can replace the one their lender requires.
Generally, a home buyer or borrower is required by their lender to get a home appraisal. But be that as it may, there are some cases where you can opt to skip the home appraisal altogether. Depending on the loan, property, and lender requirements, an appraisal waiver may be available in some qualifying situations. That said, getting a home appraisal nevertheless is in a homebuyer’s or borrower’s best interest, and waivers are not guaranteed.
If the seller has taken the liberty of getting their own appraisal, you should not take it at face value as your lender definitely will not. The truth is that the only appraisal that matters is the one that is accepted by the buyer’s lender. Lenders generally want an appraisal process they can rely on for the loan decision, which is why a seller’s appraisal often does not solve the buyer’s lending requirement by itself.
That does not mean the seller’s appraisal is useless. It may still offer context on how the seller is pricing the home or help you understand where value questions could come up. But if you are financing the purchase, you should assume your lender will decide whether a new appraisal, a transferred appraisal, or a waiver is acceptable for your file.
An appraisal is an unbiased professional opinion or assessment of a home’s value. Typically, appraisals are used in purchase-and-sale and refinance transactions. If you are looking to purchase a home, then the appraisal is used to determine whether the home’s contract price is appropriate, given its condition, location, and features. In contrast, if you are refinancing, then the appraisal provides the lender with an accurate picture of what your home is worth to ensure that the lender is not giving you more money than necessary (over-borrowing).
When people ask how long an appraisal is “good for,” the practical answer is that lender and loan-program acceptance rules matter more than a simple universal expiration date. For example, Fannie Mae requires the property to be appraised within the 12 months prior to the date of the note and mortgage, and Freddie Mac also applies a 12-month requirement tied to the note date for subsequent transactions. In other words, an appraisal report may still exist, but whether it can be used for your loan depends on the lender’s and loan program’s requirements at that time.
Because of that, buyers should avoid assuming a recent seller’s appraisal will automatically work for their mortgage. If timing is a concern, ask your lender early whether a new appraisal is needed, whether any existing appraisal can be accepted, and whether an update is possible under the applicable loan guidelines.
Your lender orders the appraisal to be performed by a licensed appraiser. However, you, the borrower, are typically required to pay the appraisal fee, which can be several hundred dollars. The cost appears on the Closing Disclosure as part of your closing costs.
A qualified appraiser will create a report that is based on a visual inspection of the home, recent sales of similar properties, current market trends, and aspects of the house to determine its appraisal value.
From a borrower’s perspective, a standard appraisal process usually includes the appraiser reviewing the property’s condition, interior and exterior features, structure, upgrades, amenities, foundation, car storage, and appliances, then comparing the home with similar recent sales. The resulting report is designed to help the lender evaluate whether the home’s value supports the loan.
Borrowers can also expect the report to include supporting exhibits and photographs. Fannie Mae states that, at a minimum, the appraisal report must include photographs of the kitchen, all bathrooms, and the main living areas of the property. Exact report requirements can vary by property type and loan file, but the appraisal is generally focused on value and market support rather than serving as a replacement for inspections or other transaction documents.
The major difference between the two is that an appraiser does not look for potential defects in the home, as this is the responsibility of the home inspector. It is time to hire an inspector when you are purchasing a home. At this time, an inspector will provide you with an itemized report of potential repairs or problems with the property. On the other hand, an appraiser focuses on whether the home’s agreed-upon purchase price is in line with what the house is actually worth.
Thus, as you can see, an appraisal is an important part of the home buying process, and if everything goes as planned, the home appraisal will likely be just another box to check on your closing checklist. The only issue that could arise with your home appraisal value is if the home’s value is lower than expected. In this instance, the transaction can be delayed or even canceled. So, a home appraisal is not something you should take lightly or leave up to the seller.
Ultimately, regardless of whether you are purchasing, selling, or refinancing a home, a basic understanding of how the appraisal process functions is a must, especially if you are buying your first home. Thus, if you need assistance or more information regarding this step of the home buying process, then do not hesitate to reach out to a knowledgeable lender in your area.
If the buyer’s appraisal comes in below the contract price, the transaction does not automatically die, but it usually needs to be reworked. One possible outcome is that the buyer and seller renegotiate the purchase price. Another is that the buyer chooses to bring in additional funds to cover some or all of the gap between the appraised value and the agreed price.
If the appraisal appears to contain factual errors or missed comparable sales, the buyer can ask the lender about the lender’s process for reviewing reconsideration requests or other appraisal-related concerns. And if the purchase contract includes a financing or appraisal contingency, the buyer may have options to step back from the transaction depending on the terms. The right path depends on the loan, the contract, and how much valuation risk the buyer is willing and able to take on.
Sammamish Mortgage can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been providing several mortgage programs and products with flexible qualification criteria to borrowers across the Pacific Northwest. Visit our website to get an instant rate quote or to use our online mortgage calculator. Or, reach out to us if you are ready to get pre-approved for a mortgage.
Usually, a buyer still needs an appraisal that the lender accepts for that specific loan file. Even if the seller already has an appraisal, the key issue is whether it meets the lender’s requirements, supports the value for the loan, and is acceptable for that transaction.
A recent seller’s appraisal still may not be enough by itself. Timing matters, but lender and loan-program rules matter more than a simple expiration date. Buyers should ask early whether the lender will require a new appraisal, accept an existing one, or allow an update under the applicable guidelines.
Sometimes an existing appraisal may be accepted or transferred, but buyers should not assume that will happen. The lender decides whether a transferred appraisal is acceptable for the loan, based on its requirements and the rules of the loan program.
Not necessarily. In some qualifying situations, a lender may allow an appraisal waiver or another lender-accepted exception. Even so, waivers are not guaranteed, and getting an appraisal can still be in a buyer’s or borrower’s best interest.
A low appraisal does not automatically end the deal, but it often means the transaction needs to be reworked. The buyer and seller may renegotiate the price, the buyer may bring in additional funds, or the buyer may explore options under any financing or appraisal contingency in the contract.
The lender typically orders the appraisal and has it performed by a licensed appraiser. That helps the lender evaluate whether the home’s value supports the loan decision.
The borrower usually pays the appraisal fee, even though the lender orders the appraisal. The cost is generally included in the borrower’s closing costs and appears on the Closing Disclosure.
A standard appraisal usually includes a visual review of the home, consideration of its condition and features, and a comparison with similar recent sales. The report commonly covers interior and exterior features, structure, upgrades, amenities, foundation, car storage, appliances, and supporting photos and exhibits.
An appraisal is primarily about value and whether the home supports the agreed price and the loan amount. A home inspection is focused on identifying defects, repair concerns, or other property issues for the buyer.
Because the appraisal is ordered for the loan process, the lender uses it to evaluate the file, and the borrower can review the appraisal as part of the transaction. If the buyer believes the report contains factual errors or missed comparable sales, the buyer can ask the lender about its process for reviewing appraisal-related concerns before closing.
Our loan officers are ready and waiting to help you apply for your home loan.
Learn more about the people behind Sammamish Mortgage
Whether you’re buying a home or ready to refinance, our professionals can help.
Mortgage Support — 24/7
No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.
Adjust the parameters based on what you want to track
