Understanding Appraisals

Dated: 07/28/2019

Views: 91

Image title



Appraisals are one of the most confusing aspects of buying or selling real estate for the consumer. When a buyer and seller agree on a sales price, it can be frustrating to hear that the appraisal came in with a value too low. It’s not enough for the principals to agree to the price, the appraisal is the lender’s way to ensure they are not loaning money over the actual market value of the property. 


The appraised value is reached by a licensed professional who looks at the real estate market in which the target property is located. They start with the target property and then look for recent sales in the area of comparable properties. These comparable properties will be located within a short distance of the target home, normally within a 5 mile radius. They should also be of comparable size and often fall within the same housing development. 


Once these homes are identified, the appraiser will adjust for the specific differences. For instance, does the target home have an upgraded kitchen or swimming pool? They add or subtract value based on such things as location, view, lot size, upgrades, additions, condition and many other factors. They can then arrive at a valuation for the target home. 


Once the appraisal has been completed, the lender is notified of the value. At this point, the loan amount is either confirmed or declined. If the appraisal comes in too low, the principals can choose to make up the difference in sales price, lower the sales price or cancel the transaction. 


Appraisals are not as complicated as they appear. By learning about recent sales in your area ahead of time, you can price your home appropriately up front; then the appraisal should come back as expected. 

Blog author image

Tim McLaughlin

Buying or selling your home is one of the most exciting times of your life! It can also be scary, confusing and stressful. I’ll work hard to make that process as painless as possible for you. I spen....

Latest Blog Posts

What Type Of Mortgage Is Right For Me

When our parents were buying their first home, there was one way to finance the purchase. You would walk down to the corner bank and asked for a 30 year mortgage. Today the average home owner moves

Read More

Cooler Weather In Denver Brings With It A Seasonal Slide In The Real Estate Market

The number of new listings added to the Denver-area housing inventory in October was down 10.14 percent month over month, but still up 4.37 percent year to date. The 5,425 homes added to the market

Read More

Castle Rock Adventure Park At Phillip S Miller Park

Come check out Castle Rocks very own ADVENTURE PARK at Phillip S. Miller Park! "A Colorado Zip Line Tour featuring 10 thrilling zip line soaring over one and a half miles of smooth,

Read More

The Mystery Of A Credit Score

"Several factors influence your credit score, which is one of the most important things in qualifying for a loan.  Understanding what factors influence a persons score

Read More