Home Value

What’s the Real Value of Your Home?

One of the things buyers can expect in today’s real estate market is negotiating the sales price of the home. When you work with your real estate agent and determine where you want to live, your agent will provide you with a list of available properties that meet your criteria. You’ve already spoken with your loan officer and submitted a loan application for a preapproval, so you’re ready to go. Once you find a home, you and your agent will craft an offer that will be somewhere between the least the seller is going to accept and the highest you’re willing to pay. But often times once your offer is made the sellers will counter with another price.

For example, a home is listed for $200,000 and your agent thinks the sellers will accept $195,000 based upon recent sales of similar homes in the area. Your agent submits your $195,000 and the next day you receive a reply from the sellers. The sellers didn’t turn down your offer but instead suggested a $198,000 price. You think about that and determine you’ll meet the sellers in the middle and offer $197,000. The sellers think about it and agree to the $198,000 price. That’s the value of the home, right? It says so on the sales contract. But the real value is what appears on the appraisal report.

The appraiser will take a copy of your signed sales contract and begin doing some research. First, the appraiser will discover recent sales of similar homes in the neighborhood where your property is located. No two houses will be exactly alike. There will be slight adjustments for things such as the age of the property, condition of the structure and other amenities such as an upgraded kitchen or master bath. Once the appraisal has been completed, it is delivered to the lender. Whatever the value that is listed on the appraisal is what the lender will use, not necessarily what appears on the sales contract. Most often the sales contract and the appraisal match. But when they do not, the lender will use the lower of either the sales contract or the appraised value.