Posted 9.26.13 @ 10:25
There are two kinds of appraisals when it comes to luxury real estate: the bank and your luxury realtor. Your realtor will tell you one thing, the bank sends an appraiser out and gives you a different number and won’t lend above that. Sometimes it’s a good thing, sometimes it’s not. It’s all going to boil down to which number your lender thinks is right and find the one that’s most reasonable. It’s great to know how much a home is really worth; after all you don’t want to pay too much right?
What a Realtor Appraiser Does
When a realtor appraiser looks at your home, they’re trying to maximise the value of a house while trying to keep as close to market price as possible. You’ll have to look at this with a grain of salt, as they can exaggerate a little bit. They’ll look at homes around you, the upgrades you have made to your home (called land improvements) and the condition of your home to determine a price.
How This Affects You
This affects you because if you’re selling you’re going to have to hope that the real estate appraiser did their job right. This probably won’t help you if you’re trying to get a realistic price; the problem is is that a bank appraiser really has the final word. If the real estate appraiser says your home for sale is worth $500,000 and the bank says your home is actually worth only $450,000, the buyer is going to have to come up with the extra money on their own.
What a Bank Appraiser Dose
When a bank appraiser comes out they’re going to look at baseline things like size of the home, comparative market analysis (homes in the same neighbourhood), how many homes are for sale in this neighbourhood and more. If they spot some premium luxury add ons, they may actually count it against you. It’s one of those things that you’re going to need to be careful about. Many homeowners will spend thousands of dollars trying to have the best home on the block, but people don’t buy these homes. They want similar homes that run about the same price as other homes in the neighbourhood.
How This Affects You
This can actually harm you, because as mentioned earlier, you could wind up with an appraiser that values your home lower or higher than you thought it was worth. If your home is appraised higher than the surrounding market people may go to one of those cheaper homes instead. If your home is appraised lower, people may not be able to buy homes for sale because their lender won’t approve that amount.
Working with a realtor and your lender will help you get a balanced appraisal – if one is way off the mark consider hiring a more expensive appraiser to look over different homes for sale. If the amount goes up you may actually be able to dispute it.
Contact us today to find out how we can help you!