Does it Appraise?

Well, let's just jump into the weeds of house buying and pricing, shall we?

Correct Pricing is Key to Appraise

The million dollar question for all sellers in a normal real estate market is “Will it appraise?”

Many people don’t know the significance of the appraisal, and wonder why they can’t price their home at any price, even if it is "special." 

Well, good news- they can! 

Bad news- there is no guarantee that it will sell at that price. 

For example, I could make a chocolate cake and then stand on the street and offer it to the public to buy for $2 million, but that doesn’t mean I will get it. Especially if there was a bank involved that provides the loan for the buyer to buy the $2 million cake.

 

Since most people have to take out a mortgage to purchase a home, they will have to sign several documents that the bank requires. One of these official papers, other than signing off on your beloved golden doodle (JK!) is that you will have an appraisal on the dream home that you have put a contract on. The appraiser’s job entails them assessing the market and making sure the home is priced within the market for its upgrades, location, age, ect.

Don't sell me.. 

If it does not appraise, the buyers have 2 choices:

 Purchase the home at the agreed upon price. The Buyers agree to purchase at the price the sellers and buyers agreed upon, which means they will make up the difference that is not covered by the bank loan, ie, mortgage.  For example, if the $2million cake appraised for $1million, and the buyers wanted to still purchase the cake, they would have to bring an additional personal $1 million to closing since the bank would not cover it in the loan. 

Negotiate a new price. This choice actually covers more than one option, but was best. Have the buyers and sellers negotiate a new price that they can agree on and split.  A house sale is composed of many decisions on the way, and the buyers and sellers can often find a solution, if they want.

The buyers could also put the appraisal in for review, if the sellers are upset, but most do not do this as it does not work in favor of the buyer. 

However, there are techniques that realtors can use in planning to list your home to help you get the maximum price. I recently helped my sellers get 9% more than the market because they lived in a very competitive housing market, their staging was excellent, and we timed it right. 

On another hand, I know of an agent in the business for 20 years who left $5000-$10000 on the table because she did not take time to understand the local market, and in order to guarantee the appraisal, kept the price low at the expense of the sellers. While it went under contract within 2 days, she left money on the table, and brought the house values down in that neighborhood.  I was incredibly upset, as I have an investment property there!

So appraisals are important, especially if you do not have the money/want to put additional money to make up the difference if the appraisals come in low. 

But a good agent will take the time to research your market and help you get the best price possible. 

I'm here, ready to help you sell your home for the right price, contact me at 703-307-0217. I'll even send you my 100+ checklist that good agents do to sell your home in 30 days.. or less!

On Time. Best Price. With Ease.