Your lender will require an appraisal on the home to verify they are not lending more than the current value. This appraisal is for the buyer and lender's use only. They do not share this information with sellers or listing agents.

After your lender reviews the appraisal, the lender may also require items be fixed. The lender rarely makes demands to have items fixed in the home. If the repairs are not done, you will not be able to get your loan. If the seller flat our refuses to make the repairs to pass the lenders requirements, you can chose to make the repairs yourself. This is indeed risky because you don't own the home yet. There is always a risk the loan won't go through, so if this happens you will be out the repair costs when you don't even own the home.

You will receive a copy of your appraisal report and it will have the appraised value on there as well as comparable sales. You have the right to object to your appraisal and terminate the contract if the appraisal didn't appraise at contract price. We often see that the appraisals come in right at contact price even if there are comps to show the home is worth more. An appraisal is merely the subjective opinion of the appraiser.

If the appraisal comes in lower than the contract price then we have an issue. The lender won't lend on the home at that point. So we have to do one of a few things. We can negotiate with the seller to reduce the price of the home to match the appraisal. You can pay the difference in the appraisal by bringing those funds to closing if the seller refuses to reduce the purchase price. If neither of those is an option you will have no choice but to terminate the contract. This rarely happens but it has happened in the past. Fingers crossed that everything appraises the first time.