Looking to buy a Palm Beach County home? Click here to search the MLS
Today we’re going to discuss appraisers and why it’s important to understand exactly what they’re doing when they’re conducting an appraisal. The common misconception is that an appraiser is there to determine the value of your home. In reality, an appraisal is simply the act, or process, of developing an opinion of value. In almost all cases, it’s not their job to assess value and it’s not what they should be doing.
The first step homeowners should take before selling their home is to interview agents so that they make sure they are hiring someone who understands the current market, has a custom marketing plan, and a proven track record. During these interviews, we spend a lot of time reviewing the comparable market analysis because I believe it’s my job to share my knowledge and provide you with actual market data to show you how I determine what price will cause your home to sell.
After you’ve hired a good agent and accepted an offer on your home, it’s time for the appraisal. The most common reason an appraisal is done is because a buyer’s mortgage lender sends one after the home has gone under contract to make sure the property is worth what the buyer is willing to pay for it. The appraisal can go one of two ways.
Here’s an example. Let’s say a buyer goes under contract for a home at $400,000 based on market data and comparable properties. It’s a great deal, and could be worth $415,000. When the appraisal comes back, however, it’s at $400,000. You could easily justify a higher price, so why the $400,000 valuation? It may have to do with the mindset of the appraiser. In some cases, there might be a higher number that comes in, but 90% of the time the appraisal comes in at value.
Here’s another example. We recently had a home right here go under contract at $525,000. The appraiser came out, conducted their appraisal, and I provided them with my data to justify the purchase price. They left, completed the report, sent it to us, and the appraisal came in at $475,000.
I was shocked, so I took a step back and decided to see if we could submit a rebuttal to show why our valuation is more accurate. I found a lot of inaccurate information throughout their appraisal, so I submitted the rebuttal. The lender saw enough holes in the report that they decided to order a second appraisal. A week later, the second appraiser comes out, they did their report, sent it over, and it came in at $525,000. That’s a $50,000 difference from the appraisal a week before, all because we did our research beforehand.
At the end of the day, an appraisal is an opinion of value and it doesn’t make or break a deal. If you’re thinking about selling your home and you’d like to interview an agent like myself or you just have any questions about the Palm Beach County real estate market, don’t hesitate to give me a call or send me an email.