March 6th, 2016 5:15 PM by Sam Kader
An appraisal is an estimation of home's market value done by a licensed appraiser using comparable recent sales of a home in the neighborhood. Real estate brokers cannot perform appraisal. Appraisals are ordered on behalf of a home buyer's lender to protect the interest of the lender. The lender's underwriter will compare the appraisal price to the final sales price of the home to ensure the value of the home is equal to or greater than the loan amount. If the home appraised lower than the final sales price, the home buyer may be able to renegotiate a lower price with the seller. If the seller will not lower the price, the buyer's lender may ask that the buyer put more money toward their down payment in order to make the difference or the buyer can walk-away and receive earnest money back. So in order to set the price of a listing by a buyer and to determine whether that price is at fair market value the respective agents are going to be looking at comparable sales. They will:
What Is Appraised Value?Appraisals provide an objective opinion of value but is not an exact science, therefore appraisals may differ. Appraisals are usually based on market value of what the property could probably be sold for in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as a specified date and the passing of title from seller to buyer under conditions whereby:
What is a Comparative Market Analysis?
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