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Whether you are buying or selling a piece of real estate, obtaining an appraisal is one of the most critical steps in the process. In the absence of it, neither party will know the true value of the property. This means that the buyer might pay too much money and the seller may not get enough. When you have a skilled real estate lawyer working for you, however, you can have confidence in your purchase or sale. Let LaFountain & Wollman P.C. represent you.

What is an appraisal?

An appraisal is an objective determination of the value of a piece of real property that is made by a licensed appraiser. The appraisal consists of a visual inspection of the premises, taking note of its condition, size, and features. The appraiser will compare the property to other similar pieces of real estate that have recently sold in the area. Ultimately, the appraiser will give an estimate of the value and prepare an appraisal report detailing his or her findings.

All parties involved in a real estate transaction need an appraisal. The seller uses the appraisal to justify the asking price and as leverage in the price negotiations. The buyer relies upon the appraisal to determine if the asking price is fair and to line up financing from the lender. Finally, the lender needs the appraisal to make sure it doesn’t give too much money to the buyer (for instance, in a mortgage).

What to know about the appraisal report

Some buyers and sellers overlook the appraisal report, failing to read it in detail and understand the appraiser’s findings. However, it’s important to take a close look at this document so you can get the best possible deal in your real estate transaction. The appraisal report will include:

  • The scope and purpose of the appraisal
  • A description of the property, which typically includes its address, lot size, legal description, how the property is zoned, and encumbrances such as easements
  • Damages, defects, improvements, and anything else indicating the property’s condition
  • The methods and techniques used by the appraiser to arrive at his or her valuation
  • A comparable sales analysis, which compares the real estate in question to recent sales of similar properties in the area
  • A final opinion of the value and anything that justifies the appraiser’s conclusion
  • Signature and details of the appraiser, such as his or her license number

Options after the appraisal report is complete

Once the report is finished, there are three possible steps to take:

If the appraisal comes in at or above the contract price, all parties will likely be satisfied. The lender will probably approve the loan and the buyer and seller can move towards the closing.

If the appraisal comes in below the contract price, the lender won’t want to approve a higher loan amount for a property of less value. This creates a gap between the approved loan amount and the asking price. The buyer and seller can renegotiate the price, obtain a second appraisal, or terminate the purchase and sale contract.

If the appraisal report cannot determine a value for the property, or there are questions about its accuracy, the buyer or seller may contest the report and support their challenge with evidence. The lender can then decide whether to revise the existing appraisal or order a new one.

Guiding You Through Your Real Estate Transaction

Regardless of which side of the real estate deal you’re on, you can benefit from the counsel of an experienced real estate lawyer. Our team can explain the details of the property appraisal process and handle all aspects of the transaction. Reach out to us today to learn more.

About the Author
Attorney PeggyAnn Wollman is an experienced lawyer and a founding member of the firm. She has worked as a lawyer in Watertown for over twenty years, and currently resides in Brighton. Attorney Wollman’s main practice areas include real estate law, condominium law, and business law.