Who Pays For The Home Appraisal?

An appraisal is necessary when purchasing a home to ensure that the property's value aligns with the purchase price, protecting both the lender and the buyer. It helps the lender determine the appropriate loan amount and ensures the buyer isn't overpaying for the property.

who pays for home appraisal  

Typically, the home buyer pays for the home appraisal as part of the closing costs, which also cover other expenses like loan origination fees, title insurance, and escrow fees. However, in some cases, the seller may agree to cover the appraisal cost as part of the negotiation process, especially in a competitive market. The appraisal fee can vary depending on factors such as the property's location, size, and complexity, but it typically ranges from $500 to $800.

 

Why The Buyer Pays

The appraisal is a critical part of the home buying process, particularly for securing a mortgage. Lenders require an appraisal to ensure that the property is worth the amount they are lending. This protects the lender by ensuring they are not financing more than the property is worth. Since the appraisal is primarily for the lender's benefit but is necessary for the buyer to obtain financing, the buyer is generally responsible for covering this cost.

 

When the Seller Might Pay

While it is standard for the buyer to pay for the appraisal, there are situations where the seller might agree to cover this cost:

  • Negotiation Tactic: In a buyer's market, where sellers are more motivated to close deals, a seller might agree to pay for the appraisal as a concession to make their property more attractive to potential buyers.

  • Seller Credits: Sometimes, as part of the negotiation, the seller might offer a credit toward closing costs, which can be used to cover the appraisal fee.
 

Can You Skip The Home Appraisal?

If you're getting a loan for a home, your lender may give you the option to use an Appraisal Waiver, or Property Inspection Waiver (PIW), on your loan application. The waiver program, begun by Fannie Mae in 2017, allows you to be approved for a mortgage without an appraisal at all.

An appraisal waiver can be granted to borrowers in certain mortgage transactions, typically those with a strong credit profile and a low loan-to-value (LTV) ratio. This waiver is more common in refinancing situations where the property's value is well-documented, but it can also apply to some home purchase transactions. The decision to grant an appraisal waiver is made by the lender based on automated underwriting systems, which assess the risk and determine if an in-person appraisal is necessary.

The appraisal is a crucial step in securing a mortgage, as it helps both the buyer and lender ensure the property’s value aligns with the purchase price. While the buyer typically pays for the home appraisal, the cost and who pays can be subject to negotiation, depending on the specifics of the real estate transaction.

 

Need An Appraisal In Phoenix AZ?

No matter what you need - single family home, age restricted community. condo, golf property, exclusive estate or mobile home - there's nothing we can't handle in the Phoenix area including Scottsdale, Chandler, Gilbert, Mesa, San Tan Valley and surrounding areas.

Give us a call to schedule your appraisal.

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