A neighbor of mine here in The Glen is considering selling his home, and knowing this will require an appraisal of his home, he asked me how they work. So I thought I would write to you about it in today’s blog.
Home appraisals are performed by independent, certified professionals (not realtors) to establish the current fair market value of a home, information that lenders use to determine if and how much they will lend. They will examine the most recent selling prices of comparable homes to yours (known as “comps”). They will consider other factors such as your home’s condition (which they will personally inspect) and whether the residential real estate market in The Glen is appreciating or depreciating. In a housing market where prices are steadily rising (which is the case in The Glen currently) appraisals are typically not a problem unless the seller and buyer have agreed on a price that is much higher than similar homes have sold for recently. In markets where prices are falling appraisals many times come in below agreed-upon sales prices.
When a home is appraised at less than the agreed upon sale price lenders either reject the buyer’s application for a mortgage or require that they put more money down. Some buyers may not have the ability to come up with additional down payment money or they may not wish to do so. In this case buyers might choose to simply walk away from the deal or they may ask you to renegotiate the purchase price downward so that they can qualify for the mortgage loan. At this point it is your choice whether to renegotiate or walk away.
Even if a home purchase transaction is for cash (not requiring a loan) some buyers still require an appraisal as a condition of the sale. This is to protect them from purchasing a home above fair market value.
So that’s how it works. If you have any questions please call or email me. I am a long time homeowner in The Glen and an award winning Realtor affiliated with Coldwell Banker.
Margaret Ludemann 847-401-1802 firstname.lastname@example.org