You might be buying a new home with a mortgage, want to refinance an existing mortgage or sell the home to anyone and not the cash buyer, you need home appraisal as the key to the transactions. So, if you are a buyer or even a seller, it is essential when you know how a home appraisal works. It is also used in determining the value of the home.
Overview of Home Appraisal
When you talk about the word “appraisal,” it means the unbiased professional opinion of the value of a home. An appraisal is used in purchasing or selling transactions but a common thing in refinances transactions.
When there are purchase and sale transactions, this appraisal is therefore used in determining whether that contract price of the home is appropriate. It first starts by valuing the location, home condition and features of that home.
While considering the refinance transactions, an appraisal will assure that the lender won’t handle the borrower money that is more than the worthiness of the home.
What a Seller Must Know
If you are a seller, when you get an accurate low appraisal will mean that you have lowered the price of your home for you to sell it. The reason is that no one will like to hear they have overpaid a home. So, holding for a buyer who will pay cash will unlikely net you the much higher sale price.
It is unfortunate that the recent distress sales that are in your surrounding might help in lowering the home’s appraisal. In case you feel that they have dragged your home down, it is better to tell the appraisal that the home should be worth more. However, the house has to be in a significant condition.
What a Buyer Must Know
If you want to buy a home under contract, the first thing you can consider is appraisal because it will help to close the process. If you find that the appraisal is higher than the contract price, then transactions should proceed as planned.
On the other hand, when the appraisal is below the contract price, the transaction can derail or delay. It means that it’s either you or the seller who wants to make transactions to fall. If you are a buyer, you will have an advantage because low appraisal will help to convince the seller to give you the house at a low price, says AAMGT.
The advantage of these appraisals is that they will help the buyer so that he can avoid overpaying while buying the home. However, the seller might think that low appraisal has been done inaccurately and therefore reluctant to drop the price.
If everything will go smooth, then the home appraisal should be a box you need to tick as you close your checklist. However, if the checklist will be lower compared to the expected amount, you might find seller canceling or delaying transactions.
It doesn’t matter if the situation you are in; you need to have a basic understanding of this appraisal process and how it functions. It should work on your favor.