What is an Appraisal and its Purpose?

What is an appraisal and its entire purpose? An appraisal is an evaluation by an independent professional, AKA, and appraiser, to determine the value of the home on which you have an accepted offer. The appraiser does look at recent comparable sales and market conditions to determine the value of the home. They also look at the condition of the home and some loan programs will be stricter on the home's condition than others. So be aware of this when looking at fixtures or homes needing a little TLC.

Let's say the house you're trying to buy is $400,000. You offered 15,000 over and your offer was accepted. Yay! If you're lucky the home you're buying will appraise for that agreed-upon sales price of $415,000. But what if the value comes in lower than the sales price?

This may allow you to renegotiate with the seller. However, in today's market, you may have signed some addendums in the offer agreeing to that sales price, no matter what the appraisal came in at. A low appraisal can also change how your loan is reviewed and underwriting. When your home value changes in the loan, it can affect your rate and your terms. So if you're offering to buy a home for more than it's listed, I have a handy little tool called bid over ask, that will project when your break-even point is with a higher purchase price based on property-specific data. This is also a great tool to use to make sure that your offer isn’t going too far over the top. So if you have more questions or if you want to talk about the bid over ask scenario, just give me a shout.

If you have questions, let me know.