Simply put, the answer is no. Many Wake County home buyers are disappointed when their house appraises for contract price especially if they felt they had negotiated a great deal. Remember, the appraisal figure is not your home value. Its purpose is to justify and secure the bank’s decision about loaning the money you and the seller have agreed upon during negotiations.
The goal of the bank is to limit it’s loan exposure and financially protect itself in the event of a possible future default or foreclosure. As I stated in Part 1 of the appraisal series, it’s an unfortunate reality that foreclosures do exist. This is one main driver as to why the appraisal process was born. It protects the lender.
Let’s look a little deeper into this so that you can get a clearer picture and hopefully ease some of your worries.
Appraisers Are Liable
To better understand the inner workings of appraisals, it’s best to first get a solid grasp on the truth: appraisers are held accountable for their figures. Are they accountable to you? Yes. That, however, is to a much lesser degree even though you’re the party paying for the actual appraisal.
The largest accountability they have is to the bank itself. Makes sense, right? It’s the bank that requires the appraisal for the purposes of protecting themselves so it only stands to logic that it’s the bank to whom the appraiser must answer if the value given is too high.
In the foreclosure process, banks have a legal right to pursue action against an appraiser that has overvalued or overstated their numbers on a property. This is because defaults are extremely costly to the lenders and if the appraisal exposed them to more risk than necessary, the appraiser can be deemed negligent.
The Cautious Value
Knowing this, most appraisers will look to protect themselves by being more conservative on their determinations. Again, they’re human and staring down the barrel of a possible legal action is definitely enough to make them err on the side of caution.
For this reason, you’ll typically come across appraisals that are only within $1000 of the agreed upon price. This is simply the appraiser choosing to not take on any unnecessary risk by possibly flying beyond that price to reach a true home value. They are basically setting a goal of reaching the lender’s goal and then gracefully bowing out.
UnExpected on the Wake County Real Estate Market
One of the best ways to manage the appraisal process is to not stress yourself out trying to force the appraisal to become your home valuation. Your goal should be to get approved for the full mortgage that you need and if the appraisal results serve that goal, you’ve come out on top.
If you have more questions about appraisals feel free to contact us at Linda Craft & Team. If you’re still searching for your new home, take a moment to look through the thousands of listings we have for the greater Triangle area and once you find the home you love, we’ll be here to help you claim it.
Have a great day!