What is a Real Estate Appraisal? And more….
Real estate appraisal, property valuation or land valuation is the process of developing an opinion of value, for real property (usually market value). Real estate transactions often require appraisals because they occur infrequently and every property is unique (especially their condition, a key factor in valuation), unlike corporate stocks, which are traded daily and are identical. The location also plays a key role in valuation. However, since property cannot change location, it is often the upgrades or improvements to the home that can change its value. Appraisal reports form the basis for mortgage loans, settling estates and divorces, taxation, and so on. Sometimes an appraisal report is used to establish a sale price for a property.
If you have bought or sold real estate – your own personal residence, investment, or commercial property, you have probably dealt with the appraisal process. Besides the inspection, it is the part of the transaction that keeps you biting your nails. As the seller or selling agent, even with the most up to date information, appraisals can come in with unexpected values.
Sellers and listing agents should do their homework and have comps ready in case the appraisal comes back with a number that is lower than the list or sales price. You can submit these comps to the appraisal company to fight the appraisal. The more homework you must share, the better the chances you have to get them to adjust price. Although in the years I have been doing real estate, I have a better chance at winning the lottery, than getting them to adjust their report.
Buyers cannot chose the appraisal company or the appraiser they use (I will not say that this is 100% of the time, but in most cases where a loan is involved, the buyer will be hands off and should remain hands off). Buyers and their agents should also do their homework to make sure the offer they are submitting matches the value of homes in the area. Renegotiating the deal after the appraisal can be a struggle once the seller has a value from the offer in their head. Even through it was offered, the bank will not accept something lower and most of the time the buyer is not willing to come to the table with more money than the home is currently worth.
An appraisal is a safety net for the bank and the buyer. The bank needs to protect its loan with a piece of real estate at a specific loan to value.
If you have any questions about real estate or would like to buy or sell a home, Investment property, or commercial property in Michigan, please e-mail us at firstname.lastname@example.org or call 248-294-7850.
Scott Fader and Gary Brincat
Mitten Realty Group, LLC
Mitten Realty Group is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.