What is an APPRAISAL?

Then the appraiser will generate a report stating whether the value of the property is: below market value, at market value, or above market value.

At value, meaning the home was priced and will be selling at a comparable price to other properties in the area. If this is the case, all parties will be told appraisal came in at value.

Best case scenario you get notified the property appraised above market value. In the simplest terms, you are paying less than what the property is valued at – aka, you are making a great purchase!

Sometimes, the appraisal will come back under market value (commonly referred to as a low appraisal). We have seen this happen more in today’s market. Properties are priced at market value, but due to the low inventory, properties are receiving multiple offers - many of them above asking price. It’s not uncommon that offers will come in $30k+ over asking. Going over asking price is attractive to sellers and can produce a winning offer. However, this could also mean you are purchasing over market value. Therefore, paying more for a property than it is valued at in comparison to other local properties.

If this is a risk you are willing to take and you want the property no matter what, you can include a 22AD (additional down payment) to your offer. This is a buyer specified amount that would potentially make up the purchase price difference IF, the appraisal comes back low. If this form is not a part of the mutual contract and an appraisal comes in low, the buyers and sellers will have to come to an agreement about what to do. This could mean that the seller lowers the price to the appraised value, or maybe both parties split the difference. It all depends on what is agreed upon!

Interested in learning more? Send us a message we would love to chat!