What is an appraisal and why is it important? I’ll answer those questions for you today.
Appraisals have become a hot topic in today’s market. An appraisal is what the bank uses to determine what they consider the true value of a home that’s being bought and sold. It’s done by a certified home appraiser who is an independent third party in the transaction.
Essentially, the appraiser will take the property you’re buying or selling and look at homes in the area with similar amenities, features, and square footage in order to compare them. They will use that information, based on recent past sales, to validate the price of the property.
Appraisals have become more relevant recently because we have seen some appreciation in the market. However, we frequently see homes that fail to appraise at what we expect, which is not good. If an appraiser takes information from a home that sold six months ago, the home might not appraise at the price it’s listed for today.
If you’re a buyer, an appraisal is meant to protect you so you don’t overpay for a home. However, it can also have a negative effect on buyers. If you fall in love with a house and agree to a certain price, your bank will only lend you money based on the appraisal. If the home doesn’t appraise, you’d have to come up with the cash to make up the difference between the appraised value and the list price of the home or walk away if the seller won’t renegotiate.
As a seller, the appraisal may affect you more than anything else in the selling process. If your home doesn’t appraise, you may have to lower your price or risk your buyer walking away.
At the Star Team, we provide our friends and clients with a comprehensive market analysis, or CMA. It uses a similar approach to determining a home’s value that an appraiser does.
If you have any questions about this topic or any other real estate topics, please give us a call or send us an email. We look forward to hearing from you!