After a nerve-wrecking negotiation process, the buyers and sellers finally had a "meeting of the minds" and agreed on price and terms for the sales contract.
Whew! All done? - Not quite!
Here comes another hurdle - most contracts with lender financing contain a "Subject to Appraisal" condition. The lender wants to make sure that the price the buyers are paying for the property is a fair market price (or below), to ensure there is sufficient collateral for their loan.
The Appraiser looks for three "comparable" houses that have sold in the same area within the last few months, and compares their selling prices to the one that is under contract. He/she then makes adjustments to account for the differences in each property to arrive at a final opinion of value (the "appraised value").
If the appraised value comes in lower than the selling price, it can cause problems with the transaction: Either the sellers can drop the price to the appraised value, the lender may decline the buyer's loan or ask the buyer to come up with the difference in cash, or the buyers may release the contract and get their earnest money back.
A professional listing agent can minimize potential problems associated with the appraisal process by helping the seller price the home at a top market value range that can be supportable for appraisals.
A thorough buyer's agent can also help by looking at close comparable homes before submitting the buyers' offer, to make sure they are not overpaying.
Wish to sell your home or just learn what the current market price of your home is? Contact The Alan Donald Real Estate Team today!