Whether you're buying or selling a home, you'll need to know how much it's worth. The value of a home is determined by an inspection and evaluation known as a real estate appraisal.
If you take out a loan to buy a home, you will almost certainly need an appraisal. Appraisals should be carried out only by qualified professionals.
Appraisals Are Normally Required to Close a Sale
If you are selling real estate, your buyer will probably need a loan from a bank to pay for it. The buyer will probably insist on the right to cancel the deal if the bank doesn't approve the loan.
Since the lender would hold a mortgage on the property if the loan were approved, it will most likely insist on an appraisal. If the appraised value is a lot lower than the agreed-upon price, the lender might deny the loan, forcing the buyer to cancel the deal.
Appraisals Are Based on a Thorough Property Inspection
An appraiser's job is to issue an opinion on the value of the property. The appraiser will inspect the property on both the inside and the outside. The inspection will include land, buildings, and fixtures (attached items such as built-in refrigerators).
The appraiser will estimate the total square footage of the land and buildings, evaluate the quality of construction, and estimate the property's value based on local market conditions. The appraiser will then issue a written appraisal report.
Use Care When Selecting an Appraiser
An appraiser is not an advocate for hire. Instead, the appraiser's job is to provide an unbiased opinion no matter who did the hiring. Some appraisers are more skilled than others, however. Appraisers must undergo training and, in most cases, be licensed by the state government.
A Second Appraisal May be Necessary
If your deal is in danger of collapsing because of a low appraisal, you can order another appraisal and see if the two reports agree. If the second appraisal comes in higher, you might be able to convince the lender to accept the results of the second appraisal.
You might also renegotiate the sale terms by lowering the sales price or increasing the down payment to reduce the amount of the loan to less than the appraised value of the property.
A Residential Real Estate Lawyer Can Help
The law surrounding residential real estate appraisals is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a residential real estate lawyer.