Home Appraisals
If you're using a loan, your lender will order an appraisal: an independent estimate of what the home is worth. It's one of the few steps after the Option Period that can still change your deal, so it's worth understanding before you're under contract.
What is an appraisal?
The basicsA licensed appraiser estimates the home's market value, based on:
Condition
Updates, wear and any needed repairs.
Features
Size, layout, bedrooms, baths, garage and lot.
Location
The neighborhood and the street the home is on.
Recent sales
What similar homes nearby have sold for.
Appraisal
For your lender
Answers one question: what is the home worth? It protects the lender from lending more than the home's value.
Inspection
For you
Answers a different question: what condition is the home in? See what an inspection covers.
Why the appraised value matters
The lower number winsYour lender will only lend based on the sales price or the appraised value, whichever is lower. Here's how a gap works:
Example numbers only.
What if it appraises low?
Your optionsA low appraisal doesn't mean you're stuck. Common ways it gets worked out:
Lower the price
Ask the seller to drop the price to the appraised value.
Meet in the middle
The seller lowers the price some, and you cover the rest.
Cover the gap
Pay the difference in cash at closing.
Reconsideration of Value
If strong recent sales were missed, your lender can submit them and ask the appraiser to take another look. It's often called an ROV.
Can you back out? It depends on your loan type and the terms of your contract. Some loans and contract addenda give you a way out if the appraisal comes in low, and some don't. We go over this with you before you ever sign, so you know where you stand.
How we help you avoid surprises
Before you offerTexas is a non-disclosure state, so home sale prices aren't public record. You won't find reliable sold prices on the big home search sites. Appraisers and agents rely on sales data from the local MLS.
Before you make an offer, we look closely at what similar homes nearby have actually sold for, so the price you offer is grounded in the market and less likely to run into an appraisal gap.
How much does it cost, and how long does it take?
Cost and timingTypical in Amarillo.
Other questions buyers ask
Quick answersIs this the same as the appraisal district value on my tax bill?
No. The value the Potter-Randall Appraisal District sets is for property taxes. A lender's appraisal is a separate, current estimate of market value for your loan, and the two numbers are often different.
Do I need an appraisal if I'm paying cash?
Not for a lender, since there isn't one. Some cash buyers still order one for peace of mind, especially on a higher-priced or unusual home.
Can the appraisal come in higher than my offer?
Yes. Your price stays the same, but it can be good news for your equity on day one.