Sharing some important information about appraisals to prepare sellers.
What should sellers know about appraisals? It’s a common question we receive, and today, we want to share some insights with you. An appraisal is essentially an opinion of the value of your home. Appraisers compare your property to similar homes in the neighborhood, typically within a mile or two in suburban areas, and up to five or ten miles in rural areas.
In addition to location, appraisers also consider the condition of your home. It’s crucial to ensure that your property meets certain criteria before the appraisal. For example, they look for essential safety features like double-strapped water heaters, smoke detectors, and carbon monoxide detectors. Failing to meet these requirements could result in a re-inspection, causing delays and additional costs.
Appraisers make adjustments based on factors such as square footage, number of bedrooms and bathrooms, garage, pool, and other amenities when comparing your home to the surrounding properties. They use these data points to determine the condition and value of your home, which is then relayed to the lender.
Another thing that you should know is what can happen when there is an appraisal gap. In some cases, sellers receive multiple offers on their property, and the buyer may choose to waive the appraisal. However, if there’s a gap between the appraised value and the agreed-upon price, the buyer will need to cover the difference out of pocket. For instance, if a property is listed at $500,000 and the buyer offers $540,000, but the appraisal comes in at $500,000, the buyer will need to bring an additional $40,000 to the table.
To ensure transparency, we, as agents, verify the buyer’s proof of funds, so we can be confident they can cover any potential gap. It’s crucial to avoid a situation where the buyer claims to have funds but can’t deliver on that promise. This verification process safeguards both parties involved.
In some unique cases or for probate estate matters, sellers may consider obtaining an appraisal before listing the property. However, in most situations, it’s not necessary, as it can be costly and time-consuming. Appraisals typically range from $500 to $1,000, depending on the property’s complexity.
Appraisals can be a confusing part of the process for many people, so don’t hesitate to ask us any questions that you have. Call or email us anytime; we are here to be your real estate resource. Also, if you’ve watched the video above till the end, we invite you to email us! As a token of our appreciation, we’ll be delighted to send you a Starbucks card if you’re among the first five respondents.
