Appraisals and Their Influence on Home Pricing
If you have ever been in the position of buying or selling your house, you might already be familiar with the concept of appraisals and what they entail. However, what you might not be aware of is that appraisals influence home pricing, which you should definitely know about. Whoever purchases the house you are selling will most likely need a loan to meet the expense. To find a suitable loan, you’ll need to get a licensed appraiser to provide a realistic estimate of the market value of your property. That will give the lender a clearer idea of the worthiness of lending money to the buyer to purchase the house. The cost of an appraisal is negotiable, but it needs to be ordered by the lender, as soon as the buyer begins the loan application process. To estimate the market value of the house, the appraiser will need to research similar sales that have been concluded in your immediate area or your subdivision. Usually, appraisers will make use of sales that have occurred not further than the past 6 months and that are similar to your home in terms of square footage, amenities (such as garages or swimming pools, or the number of floors) and the year in which the house was built. An appraisal will most likely include a thorough assessment of your house’s conditions. The appraiser will come to your home, measure it, take photos and examine your house to get a clear idea of the possible improvements to be made and on the house’s overall condition. The process can take a while. You can do your part by preparing a list of some of the most recent and important improvements and remodeling, with their relative costs. Such information can help many appraisers in speeding up the process. While some appraisers will not accept any help from you, you’ll likely have to provide the buyer with such information anyways, so trying will not hurt. After the appraiser’s visit, the lender will receive a copy of the report. The report might state that the seller must undergo some requirements before selling, meaning that the lender will have to wait before confirming the loan. In such a situation, you’ll have to get the work done at your own expense. After the repairs, the appraiser will visit the home again, at an additional cost, and assess whether the conditions of the house are now acceptable. Here’s where the appraisal might influence the home pricing. Indeed, if the value provided by the appraiser’s report is not in line with the price you are asking, the buyer has the right to negotiate or even leave the deal. For this reason, you need to ensure that your asking price is as close to the appraised value as possible. It is not worth losing a potential buyer just because you are trying to sell your house at a higher price than its value. Instead, use the appraisal value as the main guideline on which to base your pricing.