Let’s say among the condos in Gainesville Fl you’ve just found, what you believe is your dream home. The asking price is $270,000—an amount much higher than its appraisal value of $180,000—which you chose to forego. This is an overpriced condo. At that price you could more than afford any of the big, handsome Gainesville Fl homes for less and be just as excited.
This is one type of emotional buying that is certainly not wise, especially when you consider this is one of the biggest pay-down you’ll every make in your life!
The Appraisal Dilemma
How important is an appraisal before closing the deal? Pretty important; an appraisal is that critical step toward securing the amount of financing you need. It acts as the financial barometer for each player who has vested interest in the transaction, these include: the buyer, seller, lender and insurance agent.
Going back to the earlier scenario involving the Gainesville Fl condos and the equally appealing homes in Gainesville Fl; if in this case, you, the sentimental buyer decided to waive the role of an appraisal because the competition was stiff with many buyers in a sellers’ market; consider that even if you walked over to closing, you still have to have an appraisal completed before a bank or lender will even look at you.
Word to the Wise
Bottom line, an appraisal is an essential tool required for the closing of any large investment; your decision to apply it only at the back-end of the deal is tantamount to throwing caution to the wind. It’s like handing over a check, carte blanche to a realtor, saying: “sell me any of the new homes in Gainesville Fl or condos in Gainesville Fl and price is no object.”
As a final word of advice consider this: a home appraisal protects the bank from getting stuck with property that’s worth less in the market, more importantly it safeguards you from paying too much simply because “it was love at first sight.” Ultimately, it acts as a red flag for property purchases, helping you to make objective decisions in an often emotional market.