A few things you should know:
Appraisal: An expert estimate of the value of something.
Appraisers: Third-party certified or licensed contractors hired by the lender to provide their expert opinion on the price of the home.
Cost: Even though the lender requires the appraisal the cost will be passed on to you, the buyer. Appraisals typically costs around $500. You can pay this fee upfront or at closing.
Process: The appraisers visits the home, takes pictures and does a lot of research, they take a look at recent sales, current market trends, home amenities, number of bathrooms, bedrooms square feet and condition of the home to determine the value.
Why: They are required by the lender, to protect the lenders investment. They want to make sure you are not borrowing more than the home is worth because the home serves as collateral for the mortgage you are taking out.
What if my home doesn’t appraise for the agreed to purchase price: At this point you have a few options. You can seek another opinion. You can renegotiate the price of the home. Or you can make up the difference by brining your own additional monies to closing.