Buying a new home means entertaining wonderful thoughts of new cabinetry, maybe some larger bedrooms and walk-in closets, and perhaps even a larger yard. What many buyers fail to take into consideration is the home appraisal. If you are planning on selling your current home to buy a new one, you’re obviously going to need to determine the asking price for your current home before moving forward.
Regardless of whether you buy or sell, the home appraisal will come in at some point. This step involves making a highly educated guess on what your home is worth. Without an appraisal, no credible lending institution will allow you to borrow money for a house. This step allows the lender or the bank to know what it has as selling collateral in a worst case scenario. To use an extreme example, if you borrowed $800,000 but the home only sells $100,000 because that’s what it was valued at, the bank or lender does not want to run into such a situation.
Home appraisals come in once you and a buyer or seller have negotiated the price and have signed the necessary buying or selling paperwork. Hence, an appraisal that reflects the agreed upon price can be very beneficial. In most cases, the appraisal will be paid for by a seller as part of the closing.
There are other aspects to a home appraisal but these tips will help you get a better understanding so you know more or less what to expect when you decide to buy or sell your home.