Why a property when selling should always be valued for the buying party
When selling a home, an appraisal is an essential part of the buying process. Although some buyers and sellers consider it a formality, an appraisal has important benefits and safeguards for the buying party. In this article, we discuss why a property should always be valued before a buyer completes the purchase.
Objective valuation
An appraisal is carried out by an independent and certified valuer, who determines the true market value of the property. This prevents a buyer from buying a property for too high a price and ensures a fair transaction between buyer and seller.
What if the purchase value is higher than the appraised value?
It regularly happens that the agreed purchase price is higher than the appraised value of the property. This can happen, for example, in a tight housing market where buyers are willing to bid more to secure a house. In such a situation, the difference between the purchase price and the appraised value plays a crucial role.
Mortgage lenders usually finance up to a certain percentage of the appraised value of the house, usually 100% of the market value. This means that if the purchase price is higher than the appraised value, the buyer has to pay the difference from his own resources. This amount cannot be co-financed in the mortgage and must therefore be met from savings or other own financial resources.
Condition for financing
For buyers who need a mortgage, a valuation is usually required by the lender. Banks and other mortgage lenders want assurance that the property is worth the sum borrowed. Without an appraisal, a buyer cannot get financing or the mortgage application may be delayed.
Understanding the condition of the property
An appraiser not only assesses the value of the property, but also looks at factors such as maintenance condition, structural aspects and possible defects. This gives the buyer a better idea of any costs that may arise after purchase.
Preventing financial risks
Buying a property without an appraisal can be a major financial risk. If the buyer takes over the property for a higher price than its actual value, this can lead to problems when reselling or refinancing. In addition, a buyer may borrow more than necessary, which could prove unfavorable in the long run.
Transparency and certainty
An appraisal ensures transparency in the buying process. It prevents unpleasant surprises and gives the buyer certainty about the actual value of the property. This helps both the buyer and seller arrive at a fair and well-founded transaction.
Conclusion
An appraisal is an indispensable step when buying a property. It provides objective certainty about the value of the property, prevents financial risks and helps in obtaining a mortgage. So for buyers, it is always wise to have a property appraised before buying. This ensures a reliable and transparent buying experience and unpleasant surprises.
Do you also want to buy a property or have it valued? Contact one of our offices for more information.
