Appraisals are important for both buyers and sellers! Are you thinking about selling your Breckenridge Frisco Area home and you’re wondering what the value of your home is? Or are you looking at buying a home and need an appraisal done? Having an appraisal done on a home will determine what the “market value” of that home is. An appraisal is an opinion of the value of the property and is conducted by a licensed appraiser. Having an appraisal done on a home can make or break a deal. While appraisals are generally done for and by buyers, let me explain to you the process of getting an Getting An Appraisal For Your Breckenridge-Frisco Area Home completed when it comes to selling or buying Breckenridge Frisco Area home.
Who is the Appraisal For?
Generally, the appraisal is for the buyer and potentially the buyer’s lender if one is involved. The idea is that an unbiased third party can give you the ‘market value’ or price of a home. This is important for the buyer, to make sure the seller’s asking price is reasonable. It is equally important to the lender, for very similar reasons. I will explain why the appraisal matters to the lender in more depth a little further down. But an appraisal is also of value to you as a seller. It can be confirmation of what your real estate agent has already told you about the value of your home. Or if you’re very unsure of what your home is worth, it can give you a good starting point!
What Happens During An Appraisal?
The appraiser will visit the home to verify the acreage of the parcel, they will also measure the square footage of the home. They will comment on the quality of construction, the number of bedrooms, and bathrooms your home has to offer. They also will be looking at the heating and cooling system, and note any damage to the home. The appraiser uses comparable home sales to show that recent sales of a home of a similar size and character carry the same value.
They typically pick 3 to 5 homes that can be considered comparable homes or also called comps. These comps can be from any given subdivision close to your surrounding area. Once the appraiser has viewed everything they need to see from your home and found the comps to compare it to they will complete the appraisal. The next step will be for them to write a narrative summary of your home. This will have supporting documentation, photographs, and comps. The appraisal is then available to you, the buyer, and the lender, if applicable.
Why Did the Lender Require an Appraisal?
It might be frustrating when you think you are close to selling your home and then another step is added into the process by the buyer. You might be wondering why the lender has required an appraisal to be completed. They want to make sure that the buyers are not overpaying or, more importantly for the lender, that they are not overborrowing for the home! This would be considered collateral for the lender. If the borrower were to default on the loan and the bank takes the property back they want to get it off their book and sell it without a loan.
Then the bank can take the property back and want to sell the home without taking a huge loss. If the appraisal comes back and is above purchase price then this is excellent news! Then the bank feels secure that the home is strong collateral and things will continue to move along. If the appraisal comes back below the buyer’s price, this is bad as the lender will not lend over a certain percentage of the appraised value.
What If Your Appraisal Is Low & Getting An Appraisal For Your Breckenridge-Frisco Area Home
If the appraisal on your home comes back at a lower amount than you expected, you might start to wonder what this means for you and the sale of the home. One option that the buyer has is to terminate the purchase contract. As a buyer you could feel you’re overpaying for the home and this could cause the deal to fall through. Is there a chance the appraiser didn’t evaluate the home correctly? You can ask the bank to accept a second appraisal, or another option is that the buyer can find a new lender who could hire a new appraiser. All of this takes time and can add a lot of stress and frustration to the process. A second option that the Buyer has isto ask the seller to lower the price of the home to meet the appraised value.
Depending on the gap in the amount the seller might agree to this. Finally, as a third option, assuming that the seller stays firm at the contract price, the buyer may elect to bring additional funds to the closing to make up the difference between the contract price and the appraised value. This would be a lender requirement, since the loan will be based upon the appraisal and not the contract price. Or the seller might hold firm and tell the buyer to put more cash into the deal so they don’t need to take out as much from the lender. If the amount is small, the seller and the buyer can definitely work out a solution so they can still make this transaction happen! Your real estate agent will guide you through this process and all the negotiations if this were to occur.
How Can I Help?
If you have any additional questions regarding getting an Getting An Appraisal For Your Breckenridge-Frisco Area Home, please feel free to reach out to me! As we start this new year, I want my clients to know I am here for them. I strive to provide my clients with relevant and up-to-date information. I am using safety guidelines and following social distancing practices to keep my clients safe and healthy. If you would like to know more about how I can help you with your real estate needs, please reach out!
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