The Buyers Inspection and Appraisal

The buyer will insist on having the home inspected (or at least they should). The home inspection is solely for the buyers benefit and the buyer should pay for an inspection. Sometimes the buyer and seller may decide to split these costs. The home inspection will thoroughly review the physical condition of the home.

If there are any known problems with the structure, plumbing, heating, or electrical these should be fixed well before an inspection takes place. Otherwise the offer could be withdrawn.

The buyers mortgage lender will often request an appraisal. This too is the responsibility of the buyer though, again the costs can also be shared between buyer and seller if it will make the deal go smoother. The real estate appraisal will determine an approximate value of the home and is used solely to ensure there is sufficient value in the home to act as collateral on financing.

Appraisals should come close to the current value of the home. Most appraisals come in at about 10% below market value. This is partly a function of real estate market conditions and the appraisal process. The appraiser will compare your home with comparable homes that sold recently in the area. Much of this information may be 3 or more months old, and, in a hot housing market those previous sales no longer reflect the true position of the market.

There is no need to be concerned that the appraised real estate value comes in lower than your asking price (it almost always will). But do not let the  home appraisal value become a tool for the buyer to lower their offer. Make sure the buyer is aware that appraisal values tend to come in a little low. There should only be a problem if the appraisal value comes in far lower than 10% off from the asking price. If this happens then you may very well have been asking too much for your property. Or the appraiser made an error in their calculations.

To prepare your home for an appraisal be sure every thing is in top shape and the home is clean. A property in disrepair and dirty may indicate to the appraiser that the home has not been well maintained and this may reflect on the appraised value.

The Appraisal Institute provides answers to common questions about appraisals.

More on Appraisals Value vs. Selling Price

Determining Your Asking Price

Real Estate Directory > Appraisals

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