So if you’ve followed along thus far with all of my videos about appraisals and how they might impact your transaction, thank you. This is the sort of wrap-up. I’m going to talk about a couple of frequently asked questions, commonly asked questions, and maybe a few interesting experiences that have happened with appraisals, that I don’t know, kind of throw a curveball, or give you a little bit more food for thought.
So one of the commonly asked questions is, if I’m selling my home, and the house contracted for $450k, the appraisal came in at $425k, does that mean I’m losing $25,000? Well, remember, you never had the $450k. So that’s sometimes the data just is what the data is and unfortunately, or fortunately, the appraisers don’t really consider the the vibes of the house, the vibes of the deal. So just because you are the purchaser and loved the house enough to be willing to pay $450k, if they don’t love the house enough to be willing to pay $450k, and they also have a suitcase full of cash to match their vibes, it doesn’t really matter, because most people who are getting a loan are going to have an appraisal, and that appraisal is going to be sort of the buck stops here of the value of the house. So yeah, you didn’t get what you wanted to get maybe, or you didn’t get what you were thinking you were gonna get. But odds are, you’re not going to have a drastic difference in another set of data or another appraiser coming with another buyer, perhaps, if that buyer too does not have a suitcase full of cash to bridge the difference between $425k and $450k. Does that make sense?
So let’s look at the flip side of the same coin and let’s say I’m the seller, and I have my house contracted with a buyer for $450,000, we get the appraisal back. And lo and behold, it came in at $475k. Am I clicking up my heels and saying, oh my gosh, I just made an extra $25,000? Not so fast. So this is great for the buyer. In most cases, the buyer does then have a little instant extra equity beyond what they had thought, but at the end of the day, know that price only shifts downward. Should the appraisal come in low, it never goes up. So while it might be a little frustrating, and you might feel like you lost money or left money on the table, remember, you didn’t have that money to begin with. This is just kind of a numbers accounting situation and in many cases, you’re not even going to see the appraisal.
So don’t get real tied up in what the lender or the appraiser determines what the value of your house is. If it goes beyond the sales price that you’ve agreed upon, just remember that you agreed upon that sales price and unless you have other people who were willing to pay more for your house, this is what you agreed to and this is what the open market was willing to value your house at.
Thanks for following along if you have any other questions about appraisals or how they can affect your transaction, whether you’re buying or selling, drop in the comments or reach out to me and I’d love to help you get your questions answered so you’re more well informed when you’re ready to buy or sell your home.