Appraisals matter for both buyers and sellers.
In a hot market like this, when receiving an offer, or multiple, you want to make sure of two things:
- Your buyer is qualified to purchase at the price they are submitting.
- The number they are coming in at is going to appraise at the bank.
Before the bank actually gives the go ahead to supply the funds for a mortgage, they take a look at the value of the home. They also do the same thing that realtors do, they compare what’s on the market and what’s been sold to determine the mortgage amount. Their formula is a little bit different than realtors, so you want to make sure that not only is your buyer approved but that the bank is going to say yes to their figure.
An appraisal is important when you’re going in with an offer that does not have any conditions on financing. You want to ensure that the number that you are going in at is going to appraise from the banks perspective.
Your real estate agent would and should go through a comparative market analysis with you to show you the high, low and medium price point of where the house or condo should land. Ultimately it is up to your discretion but you should be guided by your agent. The agent will protect you and let you know that if you’re going in at a certain number, the bank might say, “I’m so sorry we’re not going to be able to fund this purchase up to a certain amount”.
Things can get heated when it comes to multiple offers. From the buyers perspective, there’s only a certain amount of inventory and it’s a pretty emotional process.
At the end of the day you should be advised of what the appraisal number looks like and ultimately, if you’re going above a certain point/threshold that the bank cannot fund, then unfortunately you will be responsible for the difference.
Please make sure that you have a lengthy conversation with your agent so that you understand how an appraisal might impact you on a purchase and a sale.
If you are looking to buy or sell and want more information on appraisals, give me a call 416–427–7900.