Whether you’re trying to refinance your mortgage, buy a home, or sell a home, a home appraisal is an essential part of the process. But due to complex processes, a mountain of new terminology, and nearly unlimited things you have to do, many people don’t understand what appraisals are.
That’s why we’ve taken the time to create a comprehensive guide to home appraisals, how they might affect you, and more. Let’s get started!
What is a Home Appraisal?
A home appraisal is a professional, unbiased opinion of a home’s value. It’s different from market value, which is typically determined by what buyers are willing to spend. An appraiser doesn’t take that into account.
Instead, they look at the home’s condition, location, design, floorplan, age, and other factors to determine its “true” value. Appraisals are especially essential for lenders because it helps them determine how much to approve for a mortgage. Lenders want to ensure that you aren’t overpaying for a property, so they often limit the approval amount based on a home’s appraisal value.
How Appraisal Values Are Determined
An appraisal value is based on several factors. First, appraisers will look at recent sales of similar properties in your area and current market trends. They’ll also consider the home’s amenities and features, including renovations and upgrades that add value.
They also look at the home’s location, including neighborhood, crime statistics, and school districts. Any number of things can impact the appraised value of a home, which is why it requires an unbiased professional who’s familiar with the area and understands the housing market.
How Appraisals Impact a Home Buyer
When you are buying a home, the appraisal process will be one of the first steps before you officially close. If the appraisal rate comes back equal to or higher than the finalized price, everything continues as planned. On the other hand, if the appraisal rate is lower, it could cause a delay in the contract.
Unfortunately, this can backfire in many ways. Though the appraisal may protect the seller from paying too much, the buyer may not want to lower their price, and the deal will fall through. That’s why it’s crucial to work with a trusted professional during the selling and buying process.
How Appraisals Impact a Home Seller
As a home seller, you’re going to want the appraisal price to come in higher than or equal to the agreed-upon sale price so there’s no delay or derailment of the contract. If the appraisal rate comes in lower, you might have to lower your asking price.
That said, there are rare instances where you don’t have to worry about home appraisals. For example, if you sell to an all-cash buyer who doesn’t work with a lender, you won’t have to worry about this process at all!
Need Help Buying or Selling Your Home?
Are you thinking about buying or selling your home in Jacksonville, St. Augustine, or anywhere else in Northeast Florida? If you are, you should contact the Welch Team today! Our real estate professionals would be happy to guide you along the home selling process.
And while you’re here, are you curious about what your home might be worth? Get your estimated home value for free!