Value vs. “Saleability”

There’s one person in the homeselling process who has an enormous influence on whether or not a home sale can be completed.  Who is this person, you ask?  It’s the Appraiser!   At best, he confirms what buyer and seller have negotiated and what the mortgage lender has approved, the transaction proceeds, and everyone comes away happy!  At worst, the appraiser can derail a transaction and everyone comes away unhappy!  Often these days, the appraiser’s opinion of the value of the home in question sends buyer and seller and their realtors back to the negotiating table and, with luck, flexibility, and some skill, the transaction gets back on track, and everyone is able to walk away with most of what they wanted!

So who is this appraiser, and what does he do, and how does he manage to shake things up so completely?  The appraiser is a neutral 3rd party, who delivers an opinion of the value of the home in question for the lender.  The value is determined by the condition of the home and by comparing it to similar properties in the area which have sold recently.  The goal is always for the home to appraise at or above the sale price agreed on by both buyer and seller.  The lender will not lend a buyer more money that the property securing the loan is worth, so if the appraisal comes in low, there are basically 2 choices:  seller can lower his price to the appraised value and accept less for his property, and/or buyer can make up the difference between the sale price and the appraised value, or some combination of the two can be negotiated.  If buyer and seller can’t agree to new terms, then the transaction is cancelled, and everyone walks away empty-handed.  (Buyer is able to get his Earnest Money refunded).

So, you ask, what is an appraiser looking for when he/she is determining value?   I’ll answer that question in my next post…….stay tuned!