The world of real estate is a realm filled with myths, legends, and, most importantly, misconceptions. Among the many misunderstood aspects of the home buying and selling process, one that often causes confusion and anxiety is the home appraisal. Whether you’re a first-time homebuyer or a seasoned property owner, it’s crucial to separate fact from fiction when it comes to home appraisals. In this blog, we’ll debunk four common home appraisal stories that have led many astray, shedding light on the truth behind this crucial step in real estate transactions.
Your home’s appraisal is a pivotal moment in the home buying or selling journey, as it has the power to influence the selling price, the buyer’s financing, and even the success of the entire deal. To ensure a smooth and successful real estate transaction, it’s imperative to dispel the myths surrounding home appraisals and understand the process more deeply.
Our journey through these four home appraisal myths will equip you with the knowledge and confidence to navigate this critical step in the real estate world. So, let’s dive in and uncover the truth behind these misconceptions that may have been holding you back from making informed decisions about your most asset: your home.
1. The Appraiser Works for and is on the Side of the Buyer
A common misconception is that the appraiser works for the buyer and that the valuation, as a result, is skewed in favor of the buyer. While the buyer does, in fact, pay for the home appraisal, the appraiser is actually hired by and works for the lender who owns their work.
It doesn’t matter if the buyer and seller have already reached agreement on a price. The buyer’s lender is also making an investment, and so everyone needs to be on the same page. It is, in fact, a criminal offense for anyone – either buyer or seller – to pressure or coerce an appraiser into coming up with a certain value. Further, appraisers – unlike agents and inspectors – are answerable to government regulatory agencies.
2. More Amenities and Bigger House Mean Higher Valuation
Upgrades, improvements, many amenities, and lots of square footage don’t necessarily translate into a higher valuation. A home appraisal just isn’t that simple.
The value of a house is calculated on the basis of sales data for similar homes in the neighborhood. So if a house is more amenity filled and much larger than all others in the neighborhood, then the appraiser won’t have any sales data to work with. In that case, the larger home with all the bells and whistles may not be appraised for what the parties involved think it’s worth. Basically, if surrounding houses (that have been appraised and/or sold) were built on the lot of the house in question, that’s what would be used to determine its appraised value.
3. An Appraisal Equals a Home Inspection
Another appraisal story floating around out there is that a home inspection is the same thing as a home appraisal and vice versa. Although both inspectors and appraisers inspect a property to determine its condition, the similarities end there. It’s true they are both safeguards for the buyer and lender, but they have different purposes.
An inspector’s job, primarily, is to detect any and all problems (and even potential problems) with a home. An appraiser’s job, on the other hand, is to determine the objective market value of the same house. Of course, an appraiser will, just like an inspector, note the condition of wiring, plumbing, roof, and so on, but only as a means to arrive at a valuation for the lender.
4. There’s Nothing You Can Do About a Low Home Appraisal in Georgia
Also, if you are a seller and the home appraisal comes in much lower than you think it should, you do have recourse. Bear in mind that mistakes do happen – mistakes that can severely jeopardize a potential deal.
In such a case, the homeowner, the seller, can – and should – contact the buyer’s lender and request another appraisal. Before you ever reach that stage, though, you should, according to real estate experts, get an appraisal of your own done before the lender’s appraisal takes place. Keep in mind, too, that federal law stipulates that a copy of the appraisal must be supplied to consumers who submit a written request.
Remember, your home’s appraisal is not a mysterious process shrouded in uncertainty, nor is it an arbitrary number pulled out of thin air. It’s a systematic evaluation carried out by trained professionals who use data, market trends, and industry standards to determine your property’s fair market value.
By letting go of these misconceptions, you can approach the home appraisal process with confidence. You’ll understand that the appraiser isn’t an adversary but rather a knowledgeable ally who helps ensure fairness and transparency in your real estate transaction.
So, whether you’re a buyer, seller, or homeowner considering a refinance, embracing the truth about home appraisals will empower you to make sound financial decisions and navigate the real estate market with confidence. Your home is more than just bricks and mortar; it’s a valuable asset deserving of a fair and accurate appraisal.