With the change in the real estate market and the economy over the last couple of years, appraisals for homes have not always gone smoothly for home buyers and sellers. While a home being under appraised may be a positive thing for a home buyer, saving them money, it can be a negative factor for home sellers. Either way, the deal must get done for all parties involved to complete the transaction. Here are some things you may and may not know about appraisals and some steps you may want to take during the process.
Appraisers are licensed professionals. They complete a testing process regulated by the states they practice in.
An appraisal is necessary for most transactions which require bank financing. If it is a cash transaction, the buyer can request an appraisal for their own knowledge, but it is not necessary. The appraisal is protecting the bank from loaning money to a buyer for overpriced homes, which would in turn not sell for the mortgage amount when the buyer decides to move.
An appraisal and a home inspection are two separate things. A home inspection detects what condition the home is in and the appraisal assigns value to a home.
You are entitled to a copy of the appraisal report, but you often have to request it.
The value of the home which is involved in the transaction is compared to similar homes which have sold in the area recently. Within the last year or so, real estate agents have started to ‘pull comps’ from the MLS for the appraisers to ensure that ‘good’ comps are used and that nothing is left out by the appraiser. This has also been the case in new construction homes.
These are only a couple of things you’d want to know about appraisals. Your real estate agent may have a pamphlet which helps explain the process, but if not, the MD Association of Realtors has a helpful explanation to download here.
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