Appraisal
Definition
A value opinion prepared by a certified appraiser to meet the lender’s requirements. The lender uses it to set how much it will lend: it finances a percentage of the value it retains, which can be lower than the price paid. Example: a $450,000 offer, appraised at $435,000. With a 10% down payment calculated on the price, the lender may lend 90% of $435,000, so $391,500 instead of $405,000, and ask for about $13,500 more in down payment. The appraisal does not replace an inspection: it says nothing about the building’s condition. Account for the appraiser’s timing in your financing condition.
For your plans
Confirm who orders the appraisal, the value retained, and any report qualifications. A lower value can change the financing amount or conditions.