Stern Market Minute: Appraisals
Channel: The Stern Team | KW Salt Lake City Real Estate
Date: 25/08/2022

When it comes to real estate transactions, appraisals play a vital role. As a homebuyer, you may already be familiar with the concept of an appraisal, but you may not be aware of why it has become more important now than ever before. In this blog post, we will delve into the reasons why appraisals have become an indispensable part of the real estate transaction process.

To begin with, appraisals help in determining the market value of a property. As a buyer, you want to ensure that you are paying a fair price for the property. An appraisal helps you understand the actual value of the property as per the current market conditions. In today's world where real estate prices fluctuate constantly, appraisals play a significant role in ensuring that you are not overpaying or underpaying.

Secondly, appraisals are essential for securing financing. Lenders often require an appraisal before approving a mortgage loan. The appraisal helps the lender ensure that the property is worth the amount of the loan. In the past, lenders may have been more lenient with appraisals, but with the recent housing crisis, lenders are now more careful. A more stringent appraisal policy means that you, as a buyer, need to pay more attention to the appraisal process.

Thirdly, in a competitive real estate market, an appraisal can act as a differentiator between multiple buyers interested in a property. If two or more buyers are offering similar prices for a property, the seller may choose the buyer who has done an appraisal, as they have taken the time to do their due diligence. Appraisals show the seller that you are serious about purchasing the property and have taken the necessary steps to ensure that the value of the property is in line with the asking price.

Fourthly, appraisals can assist in identifying issues with the property that may not be immediately visible. Appraisers are trained to identify issues with properties that may not be easily recognizable, such as foundation issues or water damage. An appraisal helps you identify these issues and make an informed decision about whether to proceed with the purchase.

Lastly, during the COVID-19 pandemic, appraisals have become more important as lenders and buyers alike have become more cautious. With many people losing their jobs or facing reduced income, lenders have become more cautious when it comes to approving loans. Appraisals help lenders ensure that the property is worth the amount of the loan, minimizing the risk of losses.

In conclusion, appraisals have always been an essential part of the real estate transaction process, but their importance has increased significantly in recent times. A thorough appraisal helps you make an informed decision about the value of the property and can even help you stand out from other buyers in a competitive market. While appraisals are an additional expense, they are an investment in the success of your real estate transaction and can provide you with peace of mind knowing that you have made an informed decision.

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Joshua Stern
The Stern Team
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