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If you get an offer that’s $50,000 over your list price, will your home appraise at that value when the appraiser comes through?
The short answer is, I don’t know. The vast majority of our properties are appraising at or above value, even in this rapidly appreciating market. However, there is also a subset of properties that aren’t, for a variety of reasons. It could be due to appraiser bias. Remember: An appraisal is a subjective process, similar to how agents put a comparative market analysis together.
It could also be due to a lack of comps—there’s not a lot of inventory out there. Some homes are selling, but they’re not even hitting the market, so people aren’t aware that they’re transacting. A lot of our inventory is currently under deposit and hasn’t closed yet, so in a few months we’ll have a better opportunity to verify and validate the appraised values we’re aiming for in the mortgage process.
“Don’t let the prospect of a low appraisal worry you, but be prepared for it when putting your home on the market.”
How can you mitigate some of this risk? For one thing, you can have your listing agent attend the appraisal. We do this for our clients, and we like to supply the appraiser with as much data and information as they need. They don’t know everything, just like we don’t know everything, so work with them to make the transaction happen.
Also, be prepared to talk with your agent about what happens if the home doesn’t appraise. There are a lot of multiple-offer situations happening out there, so you may be able to waive the appraisal during the negotiation. If the appraisal does come in below the sale price, the buyer would then have to cover the difference in cash.
Don’t let the prospect of a low appraisal worry you, but be prepared for it when putting your home on the market. If you have questions about this or any real estate topic, don’t hesitate to reach out to me. I’d love to help you.