To have a smooth selling process, you need to understand appraisals.

When selling a home, it's essential to understand the process of a home appraisal because it can make or break your sale. An appraisal is an opinion of value that appraisers provide by diving deep into public data, such as tax and MLS records. They will look at factors like the floor plan, quality of construction finishes, number of bedrooms and baths, square footage, and any upgrades made to the house. Appraisers also look for proper permitting and comparable home sales in the area.

In most cases, the buyer's lender orders an appraisal as a condition of the buyer's loan. It's a way for the lender to protect their investment in case the buyer defaults on the loan. The appraiser's valuation verifies that the approved loan doesn't exceed the value of the property, ensuring that the lender can recoup their investment.

“An appraisal can make or break your sale.”

However, there are situations when the value doesn’t match the price, especially when home prices are rising rapidly. This is called an appraisal gap, which happens when the appraised value of the property is less than the agreed-upon sale price. This gap could cause the buyer's lender to deny the loan or require the buyer to put more money down.

If an appraisal gap occurs, there are several things you can do; just make sure to have a professional on your side to guide you through the options. One option is to renegotiate the sale price with the buyer. Another option is for the seller to cover the difference in cash or finance the difference with a second mortgage. However, it's crucial to consider the financial implications of these options.

This is a lot of information, so if you have any questions about appraisals, don't hesitate to contact us by phone or email. We look forward to hearing from you!