Main Line Buyer Agent – Understanding Appraisals
Many aspects of buying or selling a home can cause delays, but the appraisal can sometimes even result in cancellation of the sale, depending on a number of factors. Sage Realty’s buyer agents in Main Line are dedicated to making the transaction as smooth as possible, but when a gap occurs between the seller’s listing price and the appraisal value, the process can get complicated.
Why an Appraisal?
Mortgage lenders want to be sure that they can recover any loss in the event a buyer defaults on a loan, which is why most banks and other mortgage companies require an appraisal before approving the loan. If that appraisal falls short of the asking price, the lenders are unlikely to approve a higher loan. When appraisals fall short, sellers either have to lower their asking price, or buyers have to come up with the difference before the sale can continue. The price gap between the listed price and appraisal, and the subsequent need to determine which party will cover the shortfall, often causes a delay or even cancellation of the contract.
How Low Appraisals Happen
Currently, sellers are listing their homes with higher prices because of an increase in demand. However, appraisers are having a difficult time justifying these increases through comparable recent sales, which results in a lower appraised value. As a buyer agency in the Main Line area, Sage Realty has noted that features within certain neighborhoods also negatively affect the home’s appraisal value. These value lowering features include:
- Poorly Rated Schools – Often are indicators of a lower income area. Higher rated schools can increase the home’s value.
- Rental Properties – Have little to no effect if only a few exist, but a high concentration can lower surrounding property values.
- Homeless Shelters and Services – Indicate a lower income population, which can mean lower property values.
- Cemeteries and Funeral Homes – Reduce property values due in large part to the uncomfortable feeling cemeteries and funeral homes give some potential buyers.
- Power Plants – Raise concerns about safety, pollution, and noise levels, thereby contributing to lower home prices near power plants and other factories.
- Shooting Ranges – Foster worries about safety and noise pollution from gun fire.
- Hospitals – Are desirable to some buyers, especially boomers, but when the property is too close, the values actually decrease due to noise pollution problems.
Expert Buyers Agency
To learn more about what influences the appraisal process, and how to prevent delays, contact the Main Line buyer agents at Sage Realty today!