Appraisals

What is a real estate appraisal?
Real estate appraisal is defined as “property valuation or land valuation is the process of developing an opinion of value for real property (usually market value).”

I know what you are thinking. Why do I need an appraisal if my Realtor did a comparative market analysis and we set and received an offer near that price? Well, the short answer to that is that on the buying side of the transaction, when lending is involved, the bank wants some sort of a guarantee of value. An appraisal is usually one of the last things done after the deal has been made and inspections and repairs have been agreed upon. The buyer’s lender will order the appraisal through a trusted third party. There are several different approaches to how an appraiser reaches the determined value of a property. Each property in real estate is unique and that can sometimes cause an issue in the appraisal property. If you have a home worth $300,000 in a neighborhood where all the other homes are worth $100,000 then appraisers may have to take a different approach than the most commonly used sales comparison approach. It is important as a seller to understand that the buyer’s lending institution will not finance more that the appraisal price determined by the appraiser. This means if an appraisal comes in low and the buyer does not have or is unwilling to use the money to make up the difference that you may settle for the determined appraisal value as the new purchase price. If you are unwilling to come to an agreement then the deal will not move forward. It is important to note that if the appraisal was done for an FHA loan then that appraisal amount with stay with the property for 6 months so you will need to have a buyer that is all cash or using financing other than an FHA mortgage.

Click here to download more information about understanding the appraisal process from the Appraisal Institute.

Sellers if you don’t want to be blindsided by a low appraisal or you have a very unique property, we recommend having a pre-listing appraisal done that can be presented in your showing packet. The average cost of a pre-listing appraisal is $200-400.

Here are some trusted local appraisers in Central Indiana.

Indianapolis Appraisals

Approved Appraisals of Indiana

Elite Appraisal Services LLC