One of the most important aspects of either the home buying or home selling process is the appraisal. Chances are good that you encountered one at some point during your own home buying process – either one initiated by yourself at the behest of a lender or one completed by the home seller prior to the listing of the home. Now you are on the other side of the equation, and although the procedure is the same, there are new anxieties and new concerns to face.
Today, we want to discuss some of the most basic aspects of the appraisal process. This will be the first of several articles on the subject, so don’t worry about trying to glean everything you need to know from this one piece.
So…what does it mean to get a home appraised?
Great question! The most simple answer, and the one you are probably already familiar with, is that a home appraisal is an inspection of a property done by a licensed home appraisal officer in order to discover a home’s “true” value. This is done by looking at numerous aspects of the property (number of condition of the structure, condition of the property, etc…) after which a full report is composed and presented to either the seller or the buyer, depending on who initiated the appraisal.
The important thing to remember is that the number that the appraiser comes up with is not necessarily the price at which you will list your home. Depending on the market in your area, you could find yourself asking above or below the appraised amount. What the appraisal does do is give the lending companies that work with buyers a number on which to base the amount of the loan.
Wait, you’re telling me that the appraisal doesn’t set the price of the home but it will set the amount that a loan officer will offer to a buyer?
Exactly. It’s one of those situations that doesn’t really make much sense but that we also don’t have much of a say in. Unless a buyer approaches you with cash in hand, they will be going to a loan officer and that loan officer will ask for a home appraisal. Regardless of the listing price of the home, most loan officers will only offer a loan based off of the appraised price of the home.
What this means for you as a prospective home seller is that you want to do everything in your power to ensure that the appraised price of the home is as high as it can be. We will go over some key steps to accomplish this in another upcoming article.