One of the most critical steps of the property financing process is appraisal, which ensures an unbiased valuation of the property in question, ensuring fairness for buyers, sellers, and lenders. Boundary Title & Escrow understands the importance of this step and is committed to facilitating a smooth and transparent transaction for all parties involved.
What Happens When a Property is Appraised?
Following an appraisal, you might be wondering about your next step and what you need to do, and that’s where this guide comes in handy. Keep on reading for more information about the appraisal and post-appraisal process while buying a property.
How Does Property Appraisal Work?
Before diving into the juicy details of what comes after appraisal, you should first understand how appraisals work and what they involve. Real estate appraisal is a process in which a qualified non-biased professional is hired to estimate a fair value of property. This is a common step in many real estate processes where a house is sold or refinanced, and it’s a more reliable way to estimate a home’s value than relying solely on market value.
The Process of Appraising Real Estate in Alabama
The process of home appraisal in Alabama is fairly similar to most American states. After the house goes under contract, the mortgage lender will hire a professional appraiser to inspect the house in question and determine its value.
The purpose here is to determine whether the property in question is worth the requested loan amount. The process of appraisal involves multiple aspects, including:
- Reviewing the property’s location, age, condition, and features
- Researching recent sales of comparable properties in the area
- Writing a full report that includes the estimated value of the property
In Alabama, buyers, sellers, and their agents are all allowed to be present during the process as long as they don’t interrupt the appraiser.
What Comes After Appraisal During Property Sale Process?
Appraisal is typically considered a part of the home inspection process during the mortgage and real estate sale process. Property appraisal typically follows the mortgage application and pre-approval steps. Once the appraisal is finished, the next step usually includes underwriting and mortgage processing, which is usually the final step before closing. During that stage, a professional will review the paperwork and documents associated with the property in question, including the results of the appraisal, credit reports, tax transcripts, requested loan amount, etc. The underwriter will use all that information to run a risk assessment for both the lender and the borrower to approve or reject the loan/mortgage. As you can see, whether you’re a buyer or a seller, this is simply a period where you aren’t required to do much but wait until it’s finished. That being said, you should still keep your lines of communication open, as your loan officer might contact you to request any missing documents or ask about specific details. If the underwriting process goes smoothly, you’ll be ready to sign the documents to finalize the sale on closing day.
What Happens If a Property Doesn’t Appraise to the Asking Price?
If the market value of the property was estimated fairly, it should typically be in line with the property appraisal. If the appraisal values come below the property price, the mortgage/loan process will stop. In that case, you have a few options to consider:
- Dispute the Appraisal: If you’re sure that the appraisal is unfair or undervaluing the property, you can submit a dispute to reappraise the property, which usually costs extra fees.
- Renegotiate the Price with the Seller: If the seller is eager to sell you the property, you can negotiate a lower asking price with the seller to prevent the current loan process from falling through.
- Pay the Difference: If all else fails and you’re still determined to purchase the real estate property in question, you can simply agree to the current loan terms and pay the difference out of your own pocket.
How Long Does the Appraisal Process Take in Alabama?
A typical appraisal should take around 1 to 3 weeks. This usually depends on several factors, such as the size of the house, the complexity of the report, etc. After the appraisal, the waiting period during the underwriting process can extend anywhere from 2 to 4 weeks.
How Much Does Appraisal Typically Cost in Alabama?
Although the lender hires an appraiser, the appraisal costs typically fall on the buyer in Alabama. Ideally, you should expect the appraisal to cost you anywhere between $250 to $450, although it can go as high as $1,000 or more for larger properties.
Final Thoughts
Buying a new property involves many steps, but the appraisal is crucial. While you may not be directly involved, staying responsive is important for a smooth process. Contact Boundary Title & Escrow today, and let’s move closer to your dream property!