Many people don’t understand the appraisal process, or why it’s important.
Do you know what appraisals are and why they're so important?
An appraisal is basically what the bank uses to make sure that they are not over-lending on a property, and that you’re not overpaying for it. When you go under contract on a property that you purchase, the bank will send somebody out to make sure that the value of the property makes sense with what you’re purchasing it for. They don’t want to lend $400,000 for a home that’s only worth $300,000 for two reasons: they want to protect their investment, and they want to make sure you’re not overpaying.
The bank will hire an appraisal company to send out one person to look at comparable homes in the area. This person is certified and licensed, and can comprehend the values and information of homes in that neighborhood. The appraisal process costs about $450, and the buyer pays this fee. If we already know that the value isn’t there, why put in an offer at a price that’s too high? A good Realtor will make sure you don’t overpay, and that the value is where it needs to be. Realtors can recognize if a value is off before you go under contract.
"A good Realtor will make sure you
don’t overpay for a property. "
As a seller, you want to make sure you’re maximizing your proceeds. We can have buyers putting in $1 million offers, but if we don’t show the property well enough or we’re not there to prove that the value is there in the property, you can lose tens of thousands of dollars just from a measly little appraisal. We want to make sure they aren’t missing comps in the neighborhood, and that we maximize every single dollar that we can.
If you have any questions about appraisals as a buyer or seller, please feel free to give me a call. I’d love to help you.