A home appraisal is the evaluation of a house done by a professional who is in no way connected to the property. These are performed when you want to buy or sell a home or even for refinancing. The house is appraised based on its condition, the neighborhood, and the locality.
Home appraisals are conducted to ensure that the value of the house is overestimated or underestimated. However, appraisals can lead to disappointments, especially when mortgaging and financing are involved.
What Buyers Should Know
Appraisal Is the First Step
A home appraisal is the first step when you want to buy a home. It will help you determine if the house is worth the quoted price or not. If the appraisal value equals or exceeds the contract price, you can go ahead with the transaction. The advantage of an appraisal is that is if the quoted price is more than this value, you can work out with the seller to lower the cost.
The Second Opinion Helps
As a buyer, you cannot rely only on what the seller says. A third-party’s opinion is valuable even if you are paying cash instead of applying for a loan.
However, appraisals by the lender can also backfire. It would mean that you’ll have to pay more from your pocket and getter lesser financing or find another house. In such instances, you can hire another professional for a second round of home appraisals.
You Can Negotiate
Except if you are in a hot market where homes sell faster than food, you can always negotiate the price. If the seller has other buyers to choose from, negotiation can be risky and is best avoided.
However, if the market price is less than the offered price, the seller would be willing to negotiate the final price and close the deal at a satisfactory amount.
Compromise with the Seller Is an Option
How prepared are you to compromise with the seller when the appraisal value doesn’t match the price? Sometimes, you might strike a good deal if you meet the seller to discuss and find the middle road.
It certainly will be a win-win situation for all parties involved. You get the home you want to buy, the lender will finance based on the appraisal, and the seller will get decent returns from the property.
You Can Walk Away
Yes! It might sound contradictory to the previous tips, but you can always walk away from the deal if you don’t know the terms or the price. It’s your long-term investment and needs to be decided after considering all possible factors. What about the deposit? An appraisal contingency will keep your money deposit safe even if you walk away from the deal. You don’t have to worry about losing money at this stage.
What Sellers Should Know
Appraisal Is Necessary
Yes, we know it’s risky, especially if there have been distressed sales in recent times, but an appraisal can increase the value of your home if it is in good condition. Waiting for an all-cash buyer is not always a solution, and such buyers are unlikely to pay more. After all, they are giving you the cash instead of dragging the transaction through lenders and financers.
You can show the appraisal how your home is better than other properties in the locality and push for a higher value.
Compare Your Home to Similar Properties
How can you achieve a higher appraisal value for your property in Houston? The first step is to know the market price for similar homes in the neighborhood. Study how the price has fluctuated over a year and what factors influence it.
Being armed with information will keep you one step ahead and help fix a selling price that’s more likely to get reasonable offers from buyers.
Minor Repairs and Improvements Can Increase the Value
A home that doesn’t need additional investment in terms of repairs will be valued more during the appraisal. It’ll show that you have taken good care of your home, which in turn, has increased its life span.
A clean driveway, neatly trimmed garden, junk-free backyards, and a fresh coat of paint will positively impact the appraiser. The insides should also be dust-free and smell-free, with the furniture in the right places.
Keep the Documentation Ready
If you’ve gotten any repairs and renovations done recently, it’s suggested to keep the document safe and show them to the appraiser. You will also need to share a copy of the permits. Though the responsibility of sharing this information lies with the real estate agent, you cannot rely on them.
What if the agent didn’t mention the renovations you’ve made to the house? It’s better to share the details yourself.
Be Open to Negotiations
Lastly, understand that the appraiser can value the home a little less, and the buyer will want to negotiate the price. Listen to their quote before you say no, and be willing to engage in discussions and negotiations. You might still end up getting the amount you wanted from the house. Unless you have a list of buyers willing to pay the quoted price, negotiations are worth it.
A home appraisal is a crucial step in buying and selling a home. All the involved parties want the process to be smooth and bump-free. But since that doesn’t always happen, be ready to tackle the differences.