Fact: An appraisal can determine your sales price, SOMETIMES. A buyer and seller determine sales price when they accept and negotiate an offer. This is called market price. If an appraiser determines that the value of the home is less than the sales price the seller may have to lower the sales price to the appraised price. It is negotiated at that point, but many times the buyer does not have the extra money to pay above the sales price.
Fact: An appraisal is just an opinion of a licensed appraiser of their determination of value. Appraisal values vary from appraiser to appraiser. Did you know that one appraiser can appraise a Wixom home and come up with one price, and another different appraiser can appraise the same Wixom home and come up with a totally different price. A third one can come up with a third price. They may never come up with the same price when they all appraise one Oakland County home for sale. The appraisal process is very subjective. Appraiser do not take into full account amenities and varying degrees of condition of a home. Home buyers and real estate agents take those items into account more fully. That is why it is better not to pay for an appraisal and better to use a CMA, comparative market analysis when setting the price of your Wixom home.
Myth: An Metro Detroit appraisal is a guarantee of what my house is worth. My lender used the appraisal five years ago and the house was worth more than you are saying it is worth now. If your appraiser said your Wixom home was worth $350,000 five years ago it was because there were homes similar to yours that were selling for that price. Unfortunately Michigan house prices fell in 2006 and 2007. In 2012 and 2013 they are back on the rise. They have not come back to 2006 prices, but they are moving up. market in 2007. Appraisals are based on what has sold in the last six months. So your appraisal value can go up or down.
Fact: An appraisal is just one of the tools that mortgage lenders use to find out if the value of an Oakland County home is there to give a loan out. Appraisers are licensed by the state. They have many hours of training and have to take continuing education classes. In Michigan appraisers have over 2000 hours of schooling, and internship under another appraiser. The lender seeks a professional opinion of value, as nobody can guarantee the value. The appraiser bases their opinion on training and usually years of experience.
Myth: An appraiser will always value the home at the sales price. Years ago that was true. But today the banks hire the appraiser. So appraisers do try to value a Wixom home accurately without being influenced by a mortgage lender trying to get the price higher.
Fact: Sometimes appraisals are rejected by the bank. Banks have two other avenues to double check the value of the home. One is a computer valuation model and other way is the bank hires another appraiser to review the first appraisal. It is sort of a double check system. Most banks have specialized personnel to review the appraisal in house. If the second appraiser feels the value is not there then they give a different value and the original appraisal may not be used.
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