Appraisal Process in NYC Real Estate: What You Need to Know
If the buyer is obtaining a mortgage to purchase your property, the lender will require an appraisal to determine the fair market value of the property. So, what exactly is an appraisal?
Who orders the appraisal?
The buyer’s mortgage lender orders the appraisal, and the buyer is responsible for the payment.
When does the appraisal occur?
Typically, appraisals take place during weekday hours. The buyer will arrange the date and time with the appraiser, and it will usually be scheduled during regular business hours.
Do I need to attend the appraisal?
No, you do not need to be present for the appraisal. However, we’ll meet the appraiser at your property and guide them through the apartment. We will also provide comparable sales data (“comps”) to support the purchase price and emphasize the value of your home.
How long does the appraisal take?
Appraisals in NYC generally take around 30 minutes, but this can vary depending on the size of the property and the complexity of the market.
When will we know if the property appraised for the purchase price?
Typically, it takes about 7-10 business days for the appraisal report to be completed and submitted. Once the report is ready, the buyer’s lender will inform the buyer of the appraisal result. If the property appraises for the purchase price, the process moves forward as planned. However, if the appraisal comes in lower than the purchase price, there could be complications.
What happens if the appraisal comes in lower than the purchase price?
If the appraisal value comes in lower than the agreed purchase price, this can cause issues because the lender will only approve a mortgage for the appraised amount, not the full purchase price.
For example, if the contract price is $500,000, but the appraisal is only $475,000, the lender will only offer a mortgage for $475,000, leaving the buyer to make up the difference. In many cases, the buyer will request to renegotiate the price to the appraised value (e.g., $475,000). If we are not willing to lower the price, the buyer will need to come up with the additional $25,000 in cash to cover the gap between the appraised value and the purchase price.
If the buyer cannot or does not want to pay the difference, they may choose to back out of the deal. In this case, the buyer’s earnest money is usually refunded if the appraisal is lower than the contract price.