Selling your home can be a complicated and lengthy process. There are many hidden costs lurking around every corner, and navigating every milestone and procedure is time-consuming and sometimes disappointing.
When you’re selling your home to anyone but a cash buyer, an appraisal is a key portion of the transaction. You might be here because you’re wondering exactly what an appraisal is, and how it will affect the sale of your home. Let’s talk about the impact an appraisal can have when selling a home, and the best ways to handle the appraisal process.
What is an appraisal?
An appraisal is an impartial professional assessment of the value of your home. It is used to determine whether or not the disclosed sale price is correct according to the property’s condition, location, and characteristics.
The appraisal exists primarily to protect the lender’s interests. Homes purchased with loans are served as collateral if borrowers fail to make payment. That’s why appraisals are important to lenders, to make sure buyers aren’t over-borrowing for a property.
How the value of your home is determined in the appraisal process
A property’s appraisal value is established according to many different factors:
- Recent sales of similar properties
- Market trends
- The property’s amenities
- The property’s number of bedrooms and bathrooms
- The property’s floor plan functionality
- The property’s square footage
- Any repairs needed
- The neighborhood and immediate surroundings
How does the appraisal affect the sale of your home?
If your home gets a low appraisal, you may have to lower the sale price. No buyer wants to overpay for a home. This might happen if your neighborhood has recently suffered perturbed sales, which can significantly lower the appraisal value of your home.
When the appraisal value of your home ends up being lower than expected, the transaction can be delayed and sometimes even canceled. The two possible outcomes after a low appraisal are:
- Buyers can end up backing out of a deal. Homes which selling price seems overestimated are unappealing to buyers, so many won’t feel compelling to proceed with the sale. Buyers don’t want to feel like they’re overpaying for a home.
- As a seller, you can still go ahead with the sale but you’ll have to agree to significantly lower your selling price. For many reasons, this could put you in a difficult position.
This can create an extremely stressful and distressing time for you as a seller. If this has happened to you before, you’ll know that low appraisals are a seller’s nightmare. In a traditional sale, before an appraisal, you’ll have to make sure your home is in tip-top shape, and invest a lot of money and time into the process.
How to avoid an appraisal?
By now, you’re probably wondering if there’s a way to avoid an appraisal when selling your home. There’s good news and bad.
The good news is that yes, you can avoid an appraisal by choosing to sell to a cash buyer. This way, what price you offer for the sale of your home is what you get. There is no need for an appraisal when selling to a cash buyer, so you won’t have to settle for lower. You’ll also be able to save on closing costs and you won’t have to pay a realtor commission, which can amount to 6% of all costs in a traditional sale.
The bad news is that all traditional real-estate sales require an appraisal. To navigate the sale and avoid any disappointing surprises regarding the appraisal, you’ll need to enlist the help of a realtor, which can take a big chunk out of the final sale price of your home. Here at Wasy Homes, we can help you avoid all these extra costs and ensure you make the most out of the sale of your home. As a cash buyer will purchase your home for the price you set. Contact us today to sell your home without having to go through an appraisal.