A house appraisal tells you one main thing: a home's current value. While a home appraisal tells you this one factor, it's essential for a home sale. In fact, it's important to both the buyer and seller, and it's also critical for the lender. Here is a guide to help you learn why the appraisal is imperative to the buyer and the seller, and why this is good to know if you're buying or selling a house.
The importance for buyers
There is a buyer and seller in every home sale, and an appraisal matters to the buyer for several reasons. The first reason is value. Buyers want to make sure that they're paying the right price for a home. Imagine if a buyer offers $300,000 for a house only to find the house is only worth $200,000. The buyer likely wouldn't want to go through with the purchase after discovering the property's true value. Therefore, buyers always get appraisals to protect their investments.
Secondly, most buyers rely on mortgage loans to buy homes. If the house appraisal is lower than the offer amount, the lender might reject the loan. However, if the lender still agrees to issue the loan, they might ask the buyer to put more money down on the purchase. Therefore, the buyer faces effects from a low appraisal.
The importance for sellers
The other party in the deal is the seller. The seller also cares about the appraisal but for an entirely different reason. The main reason the seller cares is to ensure that the deal goes through. For example, if the seller agrees to sell a home for $200,000 but discovers the home is only worth $150,000, the deal is at risk. The person buying this house might try to renegotiate the price, as they won't want to pay $50,000 more than the house is worth. Additionally, the seller is at risk of the deal falling through due to the lender rejecting the loan. Therefore, the appraisal is crucial for the person selling the house.
Get a home appraisal today
Now that you see why buyers and sellers need appraisals, you might understand the importance they serve in home sales. If you're ready to buy or sell a house, you will need an appraisal, and you can hire a local appraiser to get one for the home purchase or sale. Call a real estate appraisal service today to start the process.