What is an appraisal and why is it important?
First, let’s examine how the appraisal process works.
If you are buying a home or refinancing your mortgage, the lender will send a request to a third-party company to supply an appraiser.
The appraiser will then come out and look at all of the homes that have sold in your area. The appraiser will also examine what’s currently going on in the market by looking at active properties and homes that are under contract.
Then, the appraiser will measure the square footage of the home to confirm the tax data with the city. Through that assessment, they will go through upgrades and things you have done to the house in order to determine what they think your home is worth.
How does the appraisal affect you as a buyer or a seller?
Let’s say that you are buying a home for $300,000. The lender sends out an appraiser and the value comes in at $280,000. Now there is a $20,000 difference in what the lender will lend on the home.
As the buyer, you may have to bring in more money to close the gap between $280,000 and $300,000. As the seller, you may have to reduce the price to $280,000 so that the buyer can afford to get a loan for your house.
If you have any other questions about the appraisal process, just give me a call or send me an email. I would be happy to help you!