One of the most crucial aspects of buying or selling a home is the appraisal of the property. Here are some of the key parts of the process:
When a buyer agrees to purchase a home and is not paying in cash, he or she will use what is called a mortgage. A mortgage means that a financial institution will lend them the money to pay for the home. Once the buyer finds a property that they would like to purchase, the mortgage company will send out an appraiser to assess the home’s value to make sure that it’s not only a good investment for the buyer, but a good investment for the mortgage company as well.
More often than not, the buyer will pay for the appraisal, though this may be negotiated depending on the transaction.
“The appraisal protects the buyer and lender from overpaying for the property.”
The appraisal affects the buyer in a very pivotal way. Most importantly, the appraisal gives the buyer an idea of what the exact market value of the property is,meaning that the mortgage company will not pay more for the property than what it’s worth. The appraisal protects both the buyer and the lender in this process, allowing both parties to move forward in knowing that they made a sound investment.
Since the appraisal determines the ultimate value of the property, a low appraisal can put a seller in a compromising position. If an appraiser determines that the property is worth less than the sale price, the seller will either have to reduce their price to the appraised value or the buyer will have to make up the difference in cash.
For this reason, it’s crucial for sellers to price their homes properly before listing them on the market.This will help both sellers and buyers avoid any surprises when the appraisal comes in. If you have any other questions about appraisals or the buying or selling process, feel free to give me a call or send me an email. I’d be happy to help you!