One aspect of a home sale that impacts both seller and buyer equally is the appraisal. A low appraisal can literally bring the transaction to a halt.
No matter how carefully the seller’s agent researched the current market, no matter how much the buyer is willing to spend on the home, the fact remains that the lender relies solely on the appraiser’s estimate of value.
Let’s take a look at the process and three things you should know about it.
When we reference “the appraiser” in a real estate deal, we’re typically talking about a specialist hired by the buyer’s lender to determine a property’s current market value.
Appraisers who specialize in residential real estate use a number of methods to determine a particular property’s value. First, they measure the property and will compare what they come up with to the legal descriptions of the property held by the city or county.
They will also evaluate the neighborhood in which the home is located. They’ll use city or county sources, along with MLS statistics, to obtain information on recent sales in the area. They may draw land diagrams and they always write a written report for the lender and the buyer.
Real estate agents that have been in the business for some time, who have listed many homes, and who know the area well, typically come up with the same value for a property as the appraiser.
That said, there are homeowners who refuse to take their agent’s advice and overprice the home. This is one reason an appraisal may come in lower than the agreed-upon price, and there are others. These include:
Let’s face it, a low appraisal is scary. Buyers and sellers do, however, have a few choices to remedy the situation.
Sometimes sellers have knowledge about the conditions of a particular sale in the neighborhood that the appraiser isn’t privy to. Perhaps your neighbor got a job offer in another state and to get there quickly, took a low offer.
At any rate, if you find inaccuracies you should challenge the appraisal and request a new one from the lender. Questions about selling your home? Feel free to contact us.
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