Appraisal
An independent valuation of a property by a licensed appraiser, used to confirm that the home is worth what the buyer agreed to pay.
Every purchase mortgage requires the lender to verify that the property securing the loan is worth at least the contract price. An appraiser visits the home, measures it, photographs the condition, and reconciles its value against recent sales of comparable nearby properties.
When the appraised value matches or exceeds the purchase price, the loan moves forward as agreed. When it comes in low, the buyer has a few options: renegotiate with the seller, bring extra cash to bridge the gap, dispute the appraisal with supporting comparable sales, or, if their contract allows, walk away.
Some refinances and select purchase scenarios qualify for an appraisal waiver, where the lender accepts an automated valuation in place of a full report. Whether that's available depends on the loan program, the strength of the borrower file, and the property's data footprint with the agencies.
Related terms
Other terms you'll see alongside Appraisal
Recent sales of similar nearby properties, used to support an appraiser's opinion of value.
The most probable price a property would bring in an arm's-length sale between a willing buyer and willing seller.
An offer from Fannie Mae or Freddie Mac to skip the traditional appraisal in favor of an automated valuation.
The loan amount expressed as a percentage of the property's appraised value or purchase price (whichever is lower).
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