Homebuying With Guro: Appraisals
Can we all agree that a home is an investment? And just like anything you’re putting your hard-earned money into - you want to get a return on your investment. That’s why the appraisal is so critical! It’s one of the last steps of the home buying process and guarantees that your home is worth all the hard work, money, and time you’ve put into finding it.
But what buyers often confuse is the difference between a home inspection and an appraisal. And what exactly happens when a home doesn’t appraise for what you offered?
Read on to find out the difference between a home inspection and an appraisal and why the appraisal matters to you as a home buyer!
HOME APPRAISAL
So you have the market report from your agent and your home inspection - now why exactly do you need a home appraisal again? It’s simple, the appraiser is hired by the lender to guarantee that your home is worth the investment. They don’t work for you or the seller, but for the lender to provide the lender with their opinion of the property’s value, so the lender doesn’t lend you more money than the home is worth.
As the home inspector, the appraiser will look at the home’s condition but is more concerned with how that relates to market value. They’ll use market data, your home’s condition, property size, features, and more to build a report that assesses the market value of your home.
So, can a home not appraise?
Yes, this happens, especially in a hot market where sellers see multiple offers and prices are being pushed up. If a home doesn’t appraise, it opens up the negotiations again, giving you a couple of options.
The seller could reduce the price to the appraised value. However, in this current market, buyers are coming out of pocket with the difference in price if it doesn’t appraise at the contract price.
If the seller doesn’t want to reduce the price, YOU don’t have the funds to pay all of the difference, and you can’t come to an agreement on a price somewhere in between, then you have the right to cancel the contract and walk away.
If you haven't already, go to my eXp website to set up a search for your new home today!
Guro Midtsund is a Realtor with eXp Realty, LLC in Birmingham, AL. This information is deemed reliable but not guaranteed.