An appraisal higher than purchase prices means your home is worth more than what you originally paid for it. Let’s take a deeper look at the possible outcomes of having an appraisal come in high.
What happens if the appraisal is higher than the offer?
The lender or buyer typically orders an appraisal once the seller accepts the offer to validate financing at that price point. If the appraisal comes back higher than the agreed-upon purchase price, it means the buyer has negotiated a good deal and will start with instant equity.
The big question everyone always asks is, “Can the seller back out if the appraisal is higher than the offer”? And the answer is no. The buyer orders the appraisal after both parties sign the purchase agreement. They are bound by contract to proceed with the sale, regardless of the appraisal coming in higher than purchase price.
TAG Tip: Only the buyer will see the appraisal report, since they are the ones purchasing the appraisal order. The appraisal process does not include the seller.
What If My FHA Appraisal is Higher Than the Purchase Price?
If an FHA appraisal comes in above the purchase price, the loan for which it was applied remains unaffected. In other words, the lender will base your loan amount on the lower of the two: appraised value or purchase price. This standard safeguards the buyer and ensures they won’t need additional financing if the appraisal value exceeds the purchase price.
TAG Tip: Regardless of whether the appraisal is for an FHA or conventional loan, the appraisal process and standards remain the same. Lenders treat FHA appraisals the same as traditional appraisals, even if the value is higher than the purchase price.
Is it good to Have a High Appraisal?
Our short answer is yes! An appraisal above purchase price can be a golden ticket. Here are some reasons why:
- Built-in equity
- Easier financing approval with lenders
- Increased resale value
- Investment confidence
- Confident fair market value of the home
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