The housing market is hitting record levels across the nation — and that includes Brevard County and the surrounding areas. In the past six months alone, the median sold price of homes in
Selling Your Home in Brevard County: What Sellers Need to Know About the Appraisal Gap
Dated: January 10 2022
The housing market is hitting record levels across the nation — and that includes Brevard County and the surrounding areas. In the past six months alone, the median sold price of homes in Brevard County has increased by 12.5%. On the upside, this trend is causing homes to appreciate at near historical rates, giving homeowners a great opportunity to sell at a solid price point. However, if you’re a homeowner who is thinking about selling right now, there is one thing you need to consider — the home appraisal process. Why? Because appraisers take into account recent comparable sales in order to evaluate the value of your home. If recent comps are lower, or there simply aren’t any similar sales that justify your agreed sales price, you could find yourself facing an appraisal gap.
In this article, we’re breaking down the appraisal process and taking a look at what sellers need to know about the appraisal gap.
What Is An Appraisal?
An appraisal is an unbiased and professional opinion of a home’s value conducted by a licensed appraiser. The appraisal process involves an in-person inspection, in which an appraiser assesses the physical condition of the property. During this inspection, the appraiser will take a look at the home to learn about its features and ensure major components such as the plumbing, HVAC, and roof are in good condition, and there are no significant issues.
The appraiser will also perform a market analysis, which includes analyzing comparable homes that have recently sold in your area, current market trends, and local amenities, among other things.
If you’re selling your home to anyone other than an all-cash buyer, a home appraisal is a crucial step in the sales transaction. This is because the home serves as collateral for the loan, so lenders want to ensure buyers are not overborrowing for a property. An accurate appraisal helps the lender protect against loss should the buyer ever default and go into foreclosure.
What Is an Appraisal Gap?
An appraisal gap occurs when a lender’s appraiser says a home is worth less than the buyer offered to pay. With low real estate inventory and heightened buyer demand, buyers are more likely to offer over the asking price to purchase your home. However, a licensed appraiser must be objective when determining an unbiased property value. Sometimes an appraiser determines a property to be worth less than the buyer has agreed to pay. This is known as an appraisal gap. Unfortunately, an appraisal gap can complicate financing, in some cases resulting in the deal falling through.
How Do You Overcome an Appraisal Gap?
If you find yourself facing an appraisal gap, it’s crucial to seek advice from a trusted real estate professional. Failing to meet an agreement with the buyer could cause you to miss your scheduled closing date or lose your buyer.
In an ideal situation, your listing agent will negotiate with the buyer on your behalf and request that they pay the difference in cash — bridging the gap between the appraised value and the agreed sale amount. In the instance that the buyer is only willing to partially bridge the gap, you may consider lowering the asking price.
Of course, preserving the deal may be impractical when potential buyers significantly outnumber sellers. If you are not in a rush to sell, you may refuse to lower your sales price or go back to the negotiating table with the buyer. With appraisal gaps becoming increasingly common in a seller’s market, it’s crucial to have an experienced and knowledgeable real estate agent working on your behalf.
Wondering what your Brevard County home could be worth? Whether you’re thinking of selling or simply curious, our in-depth comparative market analysis will help you determine the value of your home — entirely for free! Get a more detailed view of your property’s value by clicking here.
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