How do you know if your home is priced fairly? Your real estate agent will help you determine the market value of your home. The appraiser also checks to see what your home is worth.
How do you know if your house is priced fairly for the market?
The easiest way to find out is to ask your agent. Your agent will look at comparable sales in the area. That means they will look at houses that are similar to yours that have sold in the last 90 to 180 days. The agent will consider how much those houses sold for and how the condition of the home compares to yours in order to come up with your fair market value.
On the mortgage side of things, this process is very similar to what an appraiser will do. However, appraisers take a slightly more scientific approach. They will look at two similar homes. Let’s say one has a pool and the other doesn’t. They will add a specific value to the house with the pool, like $5,000, or take away a couple thousand dollars from the property without the pool.
What happens if your home doesn’t appraise? Your lender will only go up to the appraised value, but you do have a couple of options. For instance, as a seller, you can come down on the sales price and match the appraised value.
As a buyer, you have the option to bring extra cash to the table to make up the difference. Let’s say you offered $400,000 and the house appraised at $395,000; you would need to bring an additional $5,000 in cash to make up the difference.
The third, more common option is for the buyer and seller to negotiate and meet somewhere in the middle. The seller will come down a bit and the buyer will go up a bit in order to get the house sold.
Another option is that your agent can go back to the appraiser, check what comps they used, and provide different comparables to the appraiser. In the past, we’ve seen an appraisal come in $25,000 under what the buyer offered. We sent the appraiser a couple of houses they hadn’t looked at before and they were able to increase the appraised value.
If you have any other questions about how to price your home in today’s market or about real estate in general, give us a call or send us an email. We would be happy to help you!