The appraisal is one of the most intimidating parts of selling a home. It can also be one of the most confusing. Buyers and sellers rarely understand the purpose of an appraisal.
Appraisals, which determine the value of a home, are usually required by mortgage companies and typically take place after a listing price has been determined and an offer has been made. The appraisal takes away any emotional attachment that the seller and buyer feel toward the house, because it assigns an unbiased value.
If you’re a little unclear or confused about appraisals, here are five myths explained:
The appraisal and home inspection are often used as a safeguard for the buyer, but they are not the same. Inspections identify anything that is or could be problematic with the home. Appraisals determine an objective market value of the property.
Appraisals use the comparative market analysis and take into account a home’s condition, square footage, and location. It also examines the quality and condition of plumbing, flooring, and electrical systems.
Buyers pay for the appraisal, but the appraiser is hired by and works for the lender. The appraisal protects the buyer’s lender from a bad investment. Because of this, appraisers are unbiased.
Appraisals are essentially one opinion of what your home is worth. It doesn’t necessarily dictate how much the buyer should pay or how much the seller should accept. In fact, it might not match the contract price. If the appraisal is lower than the agreed-upon price, the buyer and seller will discuss how to make up the difference.
A home’s value is measured as if it were similar to others in the area. Just because a house is big doesn’t mean it will appraise for more.
If you’ve overly improved your space with amenities that don’t exist in surrounding homes, the appraiser likely doesn’t have nearby sales data to use to determine what the amenities were worth. Some upgrades won’t impact the appraisal.
At Drew Kern Real Estate, we can help you with all of your real estate needs. Whether you’re buying or selling, give us a call at 305-329-7744, and we can walk you through the process.