An appraised value is an evaluation of a property’s value based on a given point in time. The evaluation is performed by a professional third party appraiser during the mortgage origination process. The appraiser is usually chosen by the lender but is paid for by the borrower at closing. Appraisals are important when obtaining a mortgage because it provides you with the current value of the home so you can compare it to the price you are buying it for and how much your mortgage is. If the home has an appraisal gap, then the buyer would have to re-negotiate the sale with the sellers or come up with the money to cover the difference. If not, the buyer will no longer qualify for the mortgage as the lender will not supply funds for more than what the property is worth.

During times when the market is high and homes are flying off the shelves at high asking prices, mortgage appraisal contingencies are important to include in your offer. Contact your lender for more information regarding this to make sure you are covered when purchasing your home!