What is a Real Estate Appraisal?
What is an Appraisal?
If you have bought or sold your own personal residence, investment, or commercial property; you have probably dealt with the appraisal process.
Real estate appraisal, property valuation or land valuation is the process of developing an opinion of property value based on market statistics and property data
Appraisal reports form the basis for mortgage loans, settling estates and divorces, taxation, and so on.
As the seller or selling agent, even with the most up to date information, appraisals can come in with unexpected values.
Buyers cannot chose the appraisal company or the appraiser they use (I will not say that this is 100% of the time, but in most cases where a loan is involved, the buyer will be hands off and should remain hands off).
An appraisal is a safety net for the bank and the buyer. The bank needs to protect its loan with a piece of real estate at a specific loan to value.
The location also plays a key role in valuation. However, since property cannot change location, it is often the upgrades or improvements to the home that can change its value.
Renegotiating the deal after the appraisal can be a struggle. Even through it was offered, the bank will not accept something lower and most of the time the buyer is not willing to come to the table with more money than the home is currently worth.
Buyers and their agents should also do their homework to make sure the offer they are submitting matches the value of homes in the area.
Sellers and listing agents should have comps ready to go in case the appraisal comes back lower than offer price.
You can submit these comps to the appraisal company to fight the appraisal. The more comparables shared, the higher the chance of an appraisal adjustment.
Although in my opinion there is a better chance at winning the lottery, than getting appraisers to adjust their report.
Scott Fader and Gary Brincat
Joseph Walter Realty
Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.