We’re getting close to the end of the process! One of the final steps is the appraisal. The appraisal is when the bank you are getting your loan from hires a licensed professional to go out, look at the house and determine its value.
The vast majority of the time the appraisal will come back “at value”. This means that the appraiser will determine the value to be what you are buying it for. It’s pretty rare these days to have appraisals come back higher than the purchase price, but it does happen from time to time…and that’s great because it is a good indicator that you are buying the house with equity already in it!
From time to time though, appraisals will come back lower than the purchase price. This presents a problem, because the bank will not lend money on a home that is not worth (according to the appraiser) what you’re buying it for. If this happens, the seller can lower the price if they agree to do so. It can also be a time to terminate if the seller is not willing to lower the price.
Your lender will forward you a copy of the appraisal when it is complete so you can see the value that has been determined.