The Home Appraisal

A home appraisal is a review of your home made by a professional to determine the "actual" value of your house. To come up with a value for your home, the appraiser will consider many factors. These include the sale prices of other comparable homes that have recently sold in your area, your location, the town you live in, nearby facilities (transportation, schools, etc.), your lot size, your house size, the number of bedrooms, bathrooms, and many other factors. In short, an appraiser will consider a large number of factors in coming up with an appraisal of your home.

An appraisal is usually required by the buyer's lender, and will need to occur before the lender approves the loan for the buyer. The appraisal is required by the lender, because they do not want to lend money to the buyer to purchase a house that is not worth the purchase price. This protects the lender in the case that the buyer defaults and the lender is left with the house. Since the lender would not plan on living in the house, they need to make sure that they will be able to recover their loan money by selling the house.

Should the appraisal discover the house is worth less than the purchase price, it may still be possible to complete the house sale. It simply depends on how badly the buyer wants the house, and their willingness and ability to make a large enough downpayment on the home. Alternatively, the seller can act to make changes to the house to change the valuation, or provde additional evidence to the appraiser to cause them to reassess the valuation. The lender's main concern is that the size of the loan be less than a certain percentage of the house appraiser's valuation for the house (the percentage varies from lender to lender, and according to the amount of credit they are willing to provide to the buyer).

The appraisal is an important part of selling your home. While the appraisal value may not show up in the buyer's offer or the purchase and sale agreement as a dependency, it will be a dependency in the sale of your house. This is because it will be a contingency in the buyer receiving their financing, and if the buyer does not receive financing, you will not be able to sell your house to them. So its a good idea to make sure that you set your sales price realistically. Some sellers get a professional appriasal before setting a price (although the lender will still want to have their own appraisal done), but many realtors are very experienced at understanding how pricing is set, and your realtor may well be able to help you understand the real value of your home.