How Do Appraisals Work?
Getting and accepting an offer from a buyer is incredibly exciting! But there are a few more items to tackle before you get to closing. Typically your buyer will want to have an inspection done, and their lender will want to get the property appraised (learn about the difference between an inspection and an appraisal).
If your appraisal isn’t as high as your buyer’s offer, it could delay your sale, or even cause the deal to fall through. So, it’s important to understand why appraisals are done and how exactly they work.
A home’s appraised value is determined by an unbiased professional to provide the buyer’s lender with an objective number on how much a property is worth. This mitigates risk for lenders, who can then be sure that they’re not lending buyers too much, compared to home values. Lenders do this so that if the buyer ever defaults on the mortgage and the home goes into foreclosure, the money lent can be recovered by selling the house.
Knowing that an appraisal can put a cap on the potential sale price of your home, it’s important to understand what goes into the appraisal.