April 22nd, 2014.
A home appraisal is part of nearly 95% of Portland real estate home sales. It is not 100% because around 5% of sales in Portland, Oregon are cash and do not require an appraisal. (Pro Tip: A cash buyer can hire an independent appraiser to evaluate the home and make their offer contingent on their satisfaction of that independent appraisal. This is not common, but also not a bad idea.) Also appraisals are used for home refinances, but in this article we will focus on an appraisal for a real estate transaction in Portland.
Here is what you need to know about Portland home appraisals:
Who pays for the appraisal? The buyer pays for it and it is not included in their down payment, nor in their closing costs for the loan. Typically this is an out-of-pocket expense for the buyer, similar to the buyer’s home inspection cost.
What happens if the appraiser gives a lower value than the offer? All bets are off. The default offer contract in Portland specifies that the whole offer is contingent on an appraised value meeting the sales price. If the buyer wants to walk away at this point they can and get their earnest money back. There are a few possible solutions to move forward if the buyer still wants to. The buyer can make up the difference in cash at closing. The seller can reduce the price. Or the buyer and seller can work out a compromise between the two options.
How long does an appraisal take? An appraisal in Portland for a regular single family home (under 4,000 SF) takes between 15 min. to one hour, in my experience.
Should I stay home while the appraisal is taking place? You can if you’d like, but it is best to take a walk or let the appraisal visit themselves. They often have access to the same lock box your Portland real estate agent hung on your door. If they don’t have access to that lock box, one of the real estate agents in the transaction can let them in.
What is an appraisal? I’ll let the Appraisal Foundation answer this one. They have created a nice and informative info-graphic. Click below to enlarge the picture.