Posted on: 31 August 2016Share
An appraisal is crucial to the townhome buying process. The outcome of the appraisal can have an impact on whether or not a lender is willing to finance a townhome. If you are in the process of buying a luxury townhome for sale, here is what you need to know about the appraisal.
Who Is Responsible for the Appraisal?
The appraisal is required by the lender, but the actual expense is passed on to you. The fee for the appraisal is often tied in with the closing costs. Unfortunately, the fact that you have to pay for the appraisal does not entitle you to make any demands of the appraiser. You will receive a copy of the appraisal from the lender.
The lender needs the appraisal to determine if financing the townhome you want to buy is a good investment. The price the seller has set is not necessarily the value of the townhome.
What If the Appraisal Is Low?
In the event the appraisal is lower than the seller price, your lender more than likely will not increase its financing of the townhome. It would be considered a bad investment for the lender. If something happened in the future and you were unable to pay the mortgage, the lender would be stuck with a townhome that sold for more than it was worth.
If you are set on purchasing the townhome, you can pay the difference between the appraisal amount and the seller's asking price. If you are considering this, try to negotiate with the seller on the final price. If you can possibly negotiate a lower selling price, the amount you have to come up with will be less.
You also have the option of walking away from the purchase. Although it might not be the desired outcome, it could end up being a good decision. Depending on the dollars between the selling price and the appraisal, you could be avoiding a bad investment.
Can You Ask for a New Appraisal?
Most lenders will allow you to ask for a new appraisal. It is important to note that if you do, you will be responsible for covering the appraiser's fees. There is no guarantee that there will be a difference in the appraiser's assessment of the townhome.
If you are planning to get a second appraisal, consider hiring a different appraiser. Review the report from the initial appraisal to find out if there are changes that could be made by the seller to raise the value of the townhome. If so, share those with the seller.