There’s been some confusion lately about what appraisals are and who they’re for. Today I’d like to clear that up.
Want to sell your home? Get a FREE home value report.
Want to buy a home? Search all homes for sale.
I’ve seen many people confused about what appraisals are and what they’re meant to do. Generally, an appraisal is seen as the final word on a property’s value.
Sometimes you don’t even need an appraisal. This is especially true for buyers who are paying in cash. The appraisal is needed so that the lender in that potential transaction can see the value of the home. This way, they can be sure they don’t feel like they are lending too much money to the buyer for the purchase.
The reason that appraisals and the values they give really matter is this: When someone gets qualified for a home loan, the lender will only loan them a percentage of the purchase price based on the appraised value of the home.
Sometimes you don’t even need an appraisal. This is especially true for buyers who are paying in cash. The appraisal is needed so that the lender in that potential transaction can see the value of the home. This way, they can be sure they don’t feel like they are lending too much money to the buyer for the purchase.
The reason that appraisals and the values they give really matter is this: When someone gets qualified for a home loan, the lender will only loan them a percentage of the purchase price based on the appraised value of the home.
Sometimes you don’t even need an appraisal in a home sale.
So what happens if the appraisal comes in below the agreed upon purchase price? In this case, it becomes a negotiable thing between the buyer and the seller. The buyer doesn’t have to proceed with buying, and the seller doesn’t have to agree to sell at the appraisal instead of the higher purchase price. Sometimes the price gets lower, and sometimes the buyer makes up the difference.
As prices have increased in our area over the last couple of years, appraisals are not always coming in at value. That doesn’t mean that the house isn’t worth it, it just means that we have to figure out a way to make up that difference if there’s a problem.
If this happens to you, we’ll walk you through it and figure out the best solution for you. If you have any additional questions or you’re looking to buy or sell a home, give me a call. I’d be happy to help.
As prices have increased in our area over the last couple of years, appraisals are not always coming in at value. That doesn’t mean that the house isn’t worth it, it just means that we have to figure out a way to make up that difference if there’s a problem.
If this happens to you, we’ll walk you through it and figure out the best solution for you. If you have any additional questions or you’re looking to buy or sell a home, give me a call. I’d be happy to help.
