How Do Real Estate Appraisals Work?

Establishing fair market value on your home is vital whether you’re selling or not, and appraisals are the way to do it. Contact Tasaciones.com for all your property appraisal and consulting needs of any nature.

One of the most confusing aspects of the buying or selling process for consumers is often the Appraisal process. Buyers and sellers are often unaware that their agreement to buy a home at a specific price is not enough and can become frustrated when the appraisal comes in too low and must renegotiate or terminate the contract.

Anyone can request that the purchase of a house be subject to an appraisal, however, Financial Institutions will require it. Appraisal is Banks’ way of ensuring that you are not lending money above the property’s actual market value.

Once these homes are identified, witnessed, the appraiser will adjust for specific differences. For example, one house may have new floors or a swimming pool, while another may need improvements. They add or subtract value based on these differences.

Other differences considered include, but are not limited to, location, view, size, upgrades, and overall condition. Once the appraiser has completed his appraisal and created an appraisal report, the Financial Institution will be notified of the determined value, a copy will also be given to the buyer.

The Bank will confirm or reject the amount of the loan. When appraisals are below the contract price, the buyer and seller can negotiate the next steps.

The buyer can make up the difference in the sale price by putting up more money at closing. The seller can reduce the sale price or they can mutually decide to cancel the transaction.