When buying or selling a property, a home appraisal is a critical step of the process. But what is a home appraisal anyway? Quite simply, a home appraisal is a licensed appraiser’s opinion (and comprehensive report) of a property’s market value based on comparable recent sales in the neighborhood. Why should you care? It can affect the ultimate price of the home and if the deal goes through so it’s actually a pretty big deal.
Appraisals are generally ordered by the buyer’s lender. The lender’s underwriter will compare the appraisal price to the final purchase price to ensure the buyer is not borrowing more than the house is worth. If the home appraises lower than the final sale price, the buyer may be able to renegotiate a lower price. If the seller won’t lower the price, the buyer’s lender may ask that the buyer put more money toward the down payment in order to make up the difference.
The home appraisal matters to everyone in the transaction, but especially the lender. Homeowners, be sure to have the home ready for an appraisal to be done and get it scheduled in a timely manner. However, keep in mind that the facts of the home (square footage, number of bedrooms/bathrooms, upgrades, etc.) matter much more than if the house is tidy (like in a showing).
Now that you know what a home appraisal is, do you know how is a home appraisal is done?