An appraisal is a bank’s version of a home inspection. Typically an appraisal’s main focus is determining the value of the home is at or above the purchase price. However, depending on the loan program, the appraiser may be making sure the home meets certain health and safety standards as well.
If the home you are purchasing appraises for less than the purchase price, this is often referred to as the appraisal coming in low.
In the event your appraisal comes in low, you have a few options. The seller can agree to lower the price to the appraised value, you can agree to bring the difference between the appraised value and the purchase price to closing, or you and the seller could “meet in the middle” and lower the price while you bring some additional funds to closing. If you and the seller can’t come up with a solution, it may result in the purchase agreement being canceled. Depending on how the purchase agreement is written, you, as the buyer, may or may not be able to have your earnest money refunded.
