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One of the most crucial aspects of buying or selling your home is the appraisal process. Today, I’d like to define “appraisal” and go over some of the key parts of the process so that you know how it affects you as a buyer or seller.
What is an appraisal? The short answer is that an appraisal is a valuation of the property at one point in time. The purpose of an appraisal is for the buyer’s lender to determine whether the property is worth the value that the buyer and seller have agreed upon. This way, the lender can base their loan amount and their numbers off of the current market value.
When a buyer and seller go under contract, the lender is going to order an appraisal. The appraiser will reach out to the show contact (in our case it’s our listing agent) who will go out and visit the house. The appraiser is not there to do an inspection. He or she will come to the home to take photos and measurements prior to completing appraisal report in order to ensure that what is pictured online is accurate. This makes it possible for the appraiser to put an accurate value on the house.
Once the appraiser has finished their report, they’ll then submit it to the lender. As long as everything meets value and there aren’t any conditions or repairs that need to be made, the loan will move forward. The exception to this is when the value doesn’t come in at the value that the buyer and seller have agreed upon. In this event, the process will continue.
We want to make sure the buyer is not paying too much for the house to begin with.
To prevent a low appraisal, we have an appraisal package that we send out to the appraiser before they even go out to look at the house. The reason we do this is because we want to make sure that the appraiser has accurate information about the house before they go out and generate their own opinions. This package includes the best comps we can find, in addition to a list of special features about your house that distinguish it from others that have sold recently. This appraisal package, along with the relationships we have with local appraisers, makes it much less likely for there to be issues with the value of your home when the appraisal comes in.
For our buyer clients, we have less influence over the appraiser; however, before our clients submit an offer, we do an analysis on the pricing. This protects the buyer against any appraisal issues down the road and ensures that they are not paying too much for the house to begin with.
Whether you’re getting ready to buy a house, thinking about selling, or simply have questions about how the appraisal process works, reach out and send us an email or give us a call. We’d be happy to make sure you’re well-prepared for your purchase or sale.
