Explore what a property appraisal involves, its importance in real estate transactions, and how it impacts lenders, buyers, and sellers.
An appraisal is a professional assessment of a property's value conducted by an expert known as an appraiser. This process is critical to buying, selling, or refinancing a property because it gives a fair estimate of its worth based on various factors.
An appraisal aims to ensure that the amount of money requested in a loan is not more than the property's value. This protects the lender from loaning more money than the property is worth and helps the buyer avoid overpaying for a property. It's a crucial step in the home buying and selling process that can influence the final sale price and loan terms.
If an appraisal comes in lower than the sale price, it can affect the loan amount the lender is willing to provide. Buyers may need to renegotiate the sale price with the seller, cover the difference out of pocket, or explore other financing options to close the gap.
Yes, if you believe an appraisal is unfairly low, you can challenge it. This typically involves providing additional information that might have been overlooked, such as recent comparable sales or errors in the appraisal report. The lender will review this information and may order a new appraisal or adjust the estimated value accordingly.
Appraisals are generally required when buying, selling, or refinancing a property. However, homeowners might also seek an assessment to determine their home's value for property tax disputes, estate planning, or to determine the feasibility of a home equity loan or line of credit.
Subscribe to our monthly newsletter for up-to-date real estate industry trends, news, and insights.