Understanding the Home Appraisal Process

When I begin working with a homeowner to determine the right pricing strategy for their home, my first step is to conduct a comprehensive Comparative Market Analysis (CMA).  This analysis provides valuable insights into recent sales of similar properties (within the last six months), as well as current listings that would directly compete with the home we’re selling.

Often, homeowners see their property through the lens of the time, money, and effort they’ve invested over the years.  While this perspective is entirely understandable, it’s important to recognize that appraisers approach the valuation process differently.  An appraiser’s focus is on objective factors such as the home’s square footage, lot size, and “effective age,” which takes into account any updates or renovations made to the property, compared to similar properties that have recently sold in the market.

Appraisals are designed to be impartial and data-driven.  They don’t consider the emotional attachment, time, or personal investment a homeowner has made in their property—just the hard sales data.

Ultimately, the appraisal represents the final determination of a property’s value.

While many sellers view the appraisal as a “buyers appraisal”, it’s important to understand that, in all but cash transactions, the appraisal is actually done on behalf of the lender.

There are instances where a buyer may perceive a property’s value to be higher than the appraised amount, but the lender will not approve a loan beyond the appraised value.  In such cases, the seller may wish to challenge the appraisal.  Although the listing agent can attempt to present additional comparable sales, the reality is that contesting an appraisal often proves fruitless.

When the appraisal comes in lower than the agreed-upon sale price, there are typically three possible outcomes:

1. The buyer can choose to make up the difference in cash.

2. The buyer and seller can negotiate a new, slightly lower sales price, potentially splitting the difference, with the buyer covering their portion in cash.

3. The seller can reduce the sale price to match the appraised value.

Of course, any negotiation will be guided by the current market conditions, ensuring that both parties feel they’ve reached a fair and equitable agreement.

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Please feel free to call or text me at 404 710 0204 (or drop me an email) if I can provide you with more information about this article, or if I can assist you with buying or selling your North Fulton / Forsyth County / Cherokee County / Pickens County / Dawson County real estate.

This local Real Estate blog is hosted by Gayle Barton of BERKSHIRE HATHAWAY HomeServices Georgia Properties.

I specialize in Real Estate sales in the following area: Cumming GA, Alpharetta GA, Milton GA, Dawsonville, East Cherokee County & Pickens County.

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Disclaimer: Information contained in this post is deemed reliable on the date of publication, but it is not guaranteed and it is subject to change without notice. All content, including text, original art, photographs and images, is the exclusive property of Gayle Barton and may not be used without expressed written permission.