Here’s what you need to know about how appraisals function.
Today, I want to take a few minutes to talk about appraisals and why they are crucial in the home-buying process, especially when obtaining a mortgage through a bank.
Imagine someone approaching you, saying they want to buy a house and have heard you have money to lend. Before lending them a significant amount, you’d naturally want to gather information about the property. You’d inquire about its condition, location, and market value trends in the neighborhood. Similarly, banks require appraisals to ensure they’re making a solid investment when lending money.
Appraisals help protect both the bank and the borrower. They provide an unbiased opinion about the home’s value from a licensed appraiser, making sure the sale price aligns with other comparable homes.
While there are rare cases where banks waive them, most of the time, appraisals are conducted by a third-party appraiser. Recently, we’ve seen some lower appraisals. Though not overwhelming, this is beneficial for everyone involved, safeguarding the bank’s investment and protecting the borrower from overpaying.
In our current market, some buyers may pay more than the appraised value willingly. However, when structuring offers, we include language to allow contract voiding or renegotiation if the home doesn’t appraise for the sale price.
So, think of the bank as a prudent, wealthy uncle you want to borrow money from. They want to ensure the investment is sound and take a peek at the property to feel confident about it. If you have any questions or need guidance, don’t hesitate to reach out at (330) 681-6090. We’re here to assist you throughout the process and answer all your inquiries.