The appraisal is often not needed in cash deals, but how many of us can purchase homes in South Tampa strictly with cash? Ok, there are a few, but most of us require a loan, and the lender for that loan will require an appraisal. An appraisal comes with the deal and is meant to be neither friend or foe, but an impartial judgement on the value of the home you want to purchase.
The Point of the Appraisal
The appraiser takes the square footage, age of home, number of beds and baths, use and style of home, and location, and then compares it to other homes with the same attributes to get to an unbiased value. The lender orders appraisals to keep housing prices from being overly inflated and is a precaution against fraud.
The Necessity of the Appraisal
Appraisers tended to overvalue homes in the early 2000s, especially in our home state of Florida, creating bubbles of over priced homes that homeowners could not afford. Banks then foreclosed, and the homes couldn’t be resold for the appraised value. There were many variables in the housing market crash, and this was just one. Appraisers became overly cautious and began to undervalue homes for safety’s sake.
Now we’re in 2017 in Tampa Bay, and every kink has been worked out, right? Well, almost!
Appraisals are necessary and not necessarily bad. If the home you want to purchase results in a higher appraisal than purchase price, that can work in the buyer’s favor. If you’re the seller, perhaps you offered the home too low but are looking to get out quickly and move on. The deal still can move forward and the buyer can feel like they are getting a great deal and maybe starting with early equity.
But, buyer beware!
If you don’t meet every contract stipulation, the seller may be quick to cancel the contract and raise the home price. This scenario isn’t likely; the appraiser works for the buyer’s lender, and they know “the number to hit.”
Talk Numbers With a Professional
More than likely, the appraisal may be lower than the purchase price, and this can kill the deal. As the buyer, you can ask the bank for the loan based on the appraisal and make up the difference in cash if you really love the home, you can walk away from the deal, or you can ask the seller to lower the price. Hopefully, negotiations between the agents can save the deal.
The agents at Cowen Property Group can help. Give us a call, and we can tell you more about the home buying and selling process in Tampa and St. Petersburg!