Published on our May 2022 Newsletter
Question: What is the importance of an appraisal?
Christie’s Answer: Appraisals are required to value a property for a mortgage and are a very good idea for a cash purchase. While the property is priced based on the current sales market, Appraisers look at past sale data. This is one reason the sale price of the property may be different from the apprised value.
For the buyer, if the appraised value comes in at or above their offer price, the mortgage process can move easily forward. On the other hand, if the appraisal comes in below the purchase price, assuming a standard mortgage contingency clause, rider, or addendum is in place, the buyer has three options:
- Make up the difference between the appraisal and the offer.
- Negotiate a lower purchase price with the seller.
- Cancel the offer to purchase based on the contract language in the mortgage contingency clause.
Here on St. Croix, real estate listings aren’t the only shortage in today’s market. There’s also a limited number of appraisers. So, scheduling an appraisal should be done as soon as possible.
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