Have you just had your appraisal done and are wondering if you can get the money back? Perhaps you are nearing closing and want to know what (if any) money you can expect back?
Maybe you are at the start of the process and want to know more? Whatever your reason might be, we have the answer for you!
We know how stressful purchasing a property can be, and with so many hidden costs, added fees, and inspections to be undertaken, it can seem like a never-ending money pit! You find yourself stressed, frustrated, and wondering if you will ever see some of that money again!
Well, no more! Today we are tackling appraisals to help you understand them better!
Keep reading to find out what an appraisal is and if you can get your appraisal money back at closing. We even have some tips to help you avoid the appraisal entirely!
For those that need a little refresh, let’s look at what an appraisal is and why you have had to pay for it! An appraisal takes place when you are buying or selling a home.
An appraisal is where an appraiser will inspect your property to determine its true worth (which can differ from the listing price). Their findings are then turned into a report to give the potential buyer and seller the property’s appraised value.
So why do we have it? Well, it offers the true value of the property to both the buyer and the lender. The value is then used to determine your loan amount, making this process hugely important to those using a mortgage or other loan to purchase the property!
In cases where the appraisal value is lower than the property’s asking price, the lender can lower the amount of the loan, leaving you to source the remaining amount to secure the property.
That can undoubtedly be a stressful process for most prospective buyers. Often, buyers will try to negotiate the price with the seller or back out of the deal if they cannot find the difference between the loan and the asking price.
The buyer usually handles these appraisals, but your realtor or mortgage advisor/lender can help if you are unsure. Now that we have covered what an appraisal is, let’s take a look to see if you can claim the money you spent on it back!
Let’s get straight into it! Appraisals are non-refundable, meaning you will not get your money back at closing.
The money you have forked out either on your own or through your solicitor has gone to cover a service. You have paid for an appraisal officer to come to the prospective property, inspect it, create a report, and bring the findings to you, all of which require hard work, meaning you need to pay for it.
It can seem like another added cost to buying a house or even a waste of money if you decide to walk away from the purchase once reading the report results, but these appraisals are there to show you the true value of the property.
The report offers many potential buyers a window of negotiation, lowering the property’s price and securing a lower loan. In these cases, the money can be viewed as well spent!
It can feel infuriating for those who walk away without a property and as though the money has been wasted, especially when you consider the high cost of appraisal work!
Whether you complete the sale or not, you will not get your appraisal money back at closing. Even when you negotiate your closing costs to see if you can get the seller to pay for it, appraisal fees tend to be non-negotiable.
Most solicitors and financial advisors will tell you before the process begins that you are unlikely to get your money back from your appraisal or get the seller to reimburse you the costs.
However, if you can negotiate other costs or a lower price for the property, you can consider that as recovering the money you spent on your appraisal. Any fees you can get the seller to take on (or work to the house before you purchase it) can be viewed as money you have saved.
Try to negotiate a lower asking price or for your seller to cover some repair work (if needed) or some of your closing costs. This can be a fantastic way to recover some of your money spent on your appraisal!
It can be off-putting knowing that you can’t get your money back and leaves many wondering if they need to have an appraisal or if they can skip the cost entirely.
Unfortunately, most lenders require you to have an appraisal when purchasing or refinancing your mortgage. Before accepting you, allowing you to close or purchase the property, they will ask for an appraisal to be undertaken to determine the true value of the property.
However, there are ways around this. Some schemes, such as the FHA streamline, USDA streamline loans, or VA interest rate reduction finance loan, do not require appraisals.
In these cases, you will meet their set criteria and be able to proceed with your mortgage or refinancing it without the need for an appraisal. While that can save you some money, it’s worth noting that there can be other costs you might need to consider when applying for these loans.
Be sure to read the fine print of these loans before proceeding to ensure that they are the right fit for you!
You also don’t need an appraisal if you are purchasing the property in full without a loan. Cash buyers do not need an appraisal as they are footing the bill themselves and can proceed without the inspection taking place.
However, it can be worth still having an appraisal to check that you aren’t paying more for the property than you should. This decision is a personal one and one only you can make.
And just like that, we have reached the end of the article today! As you can see, appraisals are non-refundable, and you are unlikely to get the money back at closing or the seller to foot the bill of your appraisal.
However, there are plenty of other ways to negotiate lower costs when purchasing your property, meaning you can recoup some of the money! There are also mortgages where an appraisal is not required that you can look into if you are looking to avoid the cost altogether.