What Buyers and Sellers Need to Know About the Appraisal Gap
Appraisal Gap is a term not often heard of in the real estate market. Appraisals are one of the most important steps in the buying process and sometimes stand in the way of closing a deal. A Buyer pays a Real Estate Agent to locate a property they are interested in, conduct all necessary inspections, prepare a marketable offer, and close the deal. The seller then receives a check from the Buyer.
There are many misconceptions about Appraisal Gap. Buyers need to be aware that it is not a pre-closing agreement. This is a common misunderstanding that prevents qualified buyers from accessing real estate at the best prices. While the buyer is shopping the property, they will not be signing an agreement to buy the home. An agreement to purchase real estate is only entered into after the Buyer and Seller have agreed on price, terms, and other relevant information. What buyers need to know about the Appraisal Gap is that it can prevent them from getting the best possible deal, because the real estate market has artificially inflated the prices of properties, making many properties “appraisal scarce.”
A seller will often times underbid the real estate market, especially in markets where interest rates are low. In the summertime when the real estate market is hot, they will try and drive up the prices to get the best possible deal. In the winter, they will do the exact same thing. What buyers need to understand is that this process is artificial and never actually takes place. While real estate values increase and decrease with the seasons, there is no real economic or emotional reason that causes the prices of real estate to rise or fall.
What buyers need to know about the Appraisal Gap is that there is nothing inherently wrong with the process, so long as the information that is provided is made available to both buyers and sellers. It does no good for sellers to lie about the market value of their home if the buyer cannot obtain the appraisal value. It also does no good for the buyer to purchase a home that is overpriced simply because it is not true. It is better for the buyer and seller to go through the process honestly, and allow the market price to be set by both parties rather than making an educated guess. This will ensure that the transaction is fair and equitable.
There are many different ways to get the market value of a property. Some use sales data, while others will use any number of industry insiders, or even software programs. Real estate agents use what they know and trust to make the best informed decisions regarding real estate investments. In addition, the information is compiled into easy to read reports that are often displayed right next to the property in question.
As far as what buyers and sellers need to know about the Appraisal Gap goes, it is certainly a good idea to use all of the resources that you have at your disposal. It makes no sense to ignore the advice of a seasoned real estate agent when it comes to setting your property for sale. A real estate agent knows the market and the trends that occur. They can also advise you as to whether it would be in your best interest to sell your home before the season starts. With the Appraisal Gap, you can use the resources of the appraisers you hire in order to set your property up for a quick sale.
Using multiple resources to assess a property’s worth is the only way to ensure that you are getting a fair and accurate price for your home. When you hire an appraiser, you have access to more than one professional who is qualified to give you an accurate value of the property that you wish to list. What buyers and sellers need to know about the Appraisal Gap is that listing your home with multiple appraisals may be the only way to get an accurate price for your home. Because an appraiser will be looking at several factors in order to come to a determination of an accurate market value of your home, the cost of your home will vary. If you list your home with just one appraiser, you could expect to pay too much for your home and if you list with multiple appraisers, you may not get a fair market price.
In summary: What buyers and sellers need to know about the Appraisal Gap is that it is important to hire an experienced and qualified appraiser whenever you are working on selling or buying a house. The Appraisal Gap is used to determine the market value of properties that are for sale or are currently being listed. It is also helpful for buyers and sellers to know whether they need to hire several appraisers or whether there is a general market price that would be appropriate for their needs. It is important to review your appraisal to see if you need to make any adjustments to it and to compare what other appraisers have to say with what you have ascertained.