If you have experienced the home buying process, you have likely heard of a home appraisal. A home appraisal is an estimated value of what a home is worth based on a variety of factors, such as what comparable homes in the area have been sold for as well as the condition of the home. If you are selling a home and the homebuyer is taking out a loan to purchase your property, the lender will request a home appraisal to verify that the money asked for by the borrower is an appropriate amount.
If an appraisal comes in lower than the purchase price when a property is being bought, it can be bad news for the buyer and the seller. As a result, many homeowners wonder if they should get an appraisal before listing. However, in most cases this is not in the best interest of sellers. Here’s why:
For one, an appraisal is typically a responsibility that falls upon the buyer who is applying for a loan. Even if you as a seller were to request an appraisal, it likely won’t be accepted by the lender. Lenders require an independent, third-party appraiser to inspect the property and advise on its value.
Secondly, the market value of your home does not always equal the appraisal value. In highly competitive seller’s markets, homes can often sell for far more than what they are worth. Bidding wars are prime examples of when a home could sell well above its appraised value due to high demand. Sellers should focus instead on dialing in the right market value.
Finally, a home appraisal can cost hundreds and sometimes even thousands of dollars, depending on how big the house is. By getting an appraisal ahead of time, sellers will not only lose money on appraisal fees but also potentially on the home sale, as they may be led to believe that their home’s listing price is less than what it could sell for.
When you are ready to buy a home, I would love to meet with you about your home buying options. We can review your finances and decide which home loan program is right for you. Call me today to set up an appointment.Tags: Selling