How Do Appraisal and Loan Approval Work in Washington Real Estate?
After the inspection period is completed, the next major step in most Washington real estate transactions is the appraisal and final loan approval.
If the buyer is using financing, the lender orders an appraisal to confirm the property value before approving the loan. This step usually happens during the financing contingency period described in NWMLS Form 22A.
The appraisal and loan approval process typically occurs after the inspection contingency is resolved but before closing.
What the Appraisal Is
An appraisal is an independent opinion of value performed by a licensed appraiser on behalf of the buyer’s lender.
The purpose of the appraisal is to verify that the home is worth the purchase price being financed.
The appraiser evaluates:
- Recent comparable sales
- Size and condition of the home
- Location and neighborhood
- Upgrades or renovations
- Overall market conditions
The appraiser then provides a written report to the lender establishing the appraised value.
How Long the Appraisal Process Takes
The timeline for the appraisal process varies depending on the lender and the appraiser’s availability.
In many Washington transactions, the process generally looks like this:
- Lender orders the appraisal
- Appraiser schedules access to the property
- Appraiser visits the home (usually 30–60 minutes)
- Appraisal report is completed and delivered to the lender
This process typically takes about one to two weeks, although timelines can vary depending on market conditions.
What Happens If the Appraisal Matches the Purchase Price
If the appraisal supports the purchase price, the lender can move forward with final loan approval.
At that point, the loan moves into final underwriting and preparation for closing.
What Happens If the Appraisal Comes in Low
Sometimes the appraised value comes in lower than the agreed purchase price.
If that happens, several outcomes are possible:
- The buyer and seller renegotiate the purchase price
- The buyer brings additional funds to closing
- The seller agrees to reduce the price
- The buyer may terminate the contract if allowed under the financing contingency
The specific options depend on the contract terms and whether the buyer included an appraisal gap strategy.
Final Loan Approval
After the appraisal is completed and the lender verifies the buyer’s financial documents, the lender issues final loan approval.
At this stage the lender prepares the closing documents and sends them to escrow in preparation for the closing appointment.
Once loan approval is issued, the transaction is usually approaching the final stages of the process.
Bottom Line
In Washington real estate transactions, the appraisal and loan approval typically occur after the inspection period and before closing. The lender orders an appraisal to confirm the property value, and once the appraisal and underwriting are complete, the loan can receive final approval for closing.
FAQ
Who orders the appraisal in a Washington real estate transaction?
The buyer’s lender orders the appraisal as part of the loan approval process.
How long does the appraisal process take?
The appraisal process typically takes about one to two weeks depending on the lender and appraiser availability.
What happens if the appraisal is lower than the purchase price?
If the appraisal comes in low, the buyer and seller may renegotiate the price, the buyer may bring additional funds to closing, or the buyer may terminate the contract if allowed by the financing contingency.