Worrying about appraisal? Curious to know how it works?

The home appraisal process can be scary.  It is something that buyers and sellers need to understand.  This is why you need a professional and knowledgeable agent to guide you through the process.  You need to be able to trust your agent to handle these things for you.  That is what we are for!

An appraisal can determine how much your home may sell for.  Do you need an appraisal up front, before you list your home? No, a well qualified agent can do a complete market analysis on your home to price it according to what comparable homes are selling for.  The comps should be closed in the previous 6 months.  This is also what the appraiser will look at and adjust based on location, ameneties and other factors.  Essentially the price per sq foot of your home needs to match the price per sq foot of comparable sold properties.

Once your home is listed and goes under contract with a buyer, the bank will order an appraisal of the property if it is being financed.  The appraiser will do assessment of the property and provide a report to the lender and buyer. 

Appraisals typically run anywhere from $300-$700 and are part of the buyers closing costs.  The buyer pays for the appraisal unless the contract specfies the seller paying a portion of the buyers closing costs.  

Offers are contingent on the appraisal.  If the property doesn't appraise for the purchase price, in most cases the purchase price is renegotiated or the buyer offers an appraisal gap.  An appraisal gap is when the buyer pays the difference in the appraised value and the purchase price, with cash at closing.  

Make sure you choose an agent that is fully working for you!  It is very important that the listing agent uses accurate comps when listing a property and also once the home goes under contract, the listing agent is providing documentation for the appraiser.  

Appraisal came in lower than purchase price? 

A big fear for home sellers during a real estate transaction, is that the appraisal will come in below sales price.  Here are some steps that can be taken:

1. Look for errors in the appraisal report. Does the sq footage match? Acreage?

2. Make sure the comparables used, are accurate and are not foreclosures or short sales.

3.  Request a review of the appraisal or possibly request a different appraiser.

4. Renegotiate the contract.

In short, hire an agent that can handle any issues that may come up on appraisal.  Knowledge and expertise of the market and how to handle certain situations are why you need a qualified professional on your side! Dream BIG & let us handle the rest!

Jenica Clement Properties