How Accurate is an Appraisal?
The short answer: Not very. One particular issue that comes up often is whether to buy land for sale that’s been appraised for less than the listed purchase price. While there are no easy answers, this examination of representative appraisals and real market value should help clear up the confusion surrounding the real value of homes or acres of land for sale.
What are Appraisals?
They are thorough assessments of everything related to a piece of land for sale designed to help determine its true value. Factors such as size, age, and surrounding properties all affect an appraiser’s final determination. Appraisals are crucial because they affect the loan amount when financing a property. If the appraised value is equal to or higher than the asking price, you’re fine; but if the appraised value is lower, things get tricky. Here, the bank will expect you to personally pay the difference between the purchase price and the appraised value to bridge the loan gap at closing. This is known as a low appraisal.
Issues With Current Market Appraisals
If you’ve purchased property that’s been appraised for less than the asking price, you might still be okay. There are a lot of discrepancies with several markets’ appraisal systems, leading to inaccurate estimations of a property’s true worth.
The Arizona market is a good example of this: recent economical ups and downs have caused a high amount of bank-owned sales, foreclosures, and short sales. Due to the high number of bank-owned sales, turnkey providers popped up everywhere: they go in, buy up large numbers of these houses, fix them up and sell them off the market to investors and hedge funds. While this has obvious benefits, it does throw things off: these spruced-up, move-in-ready properties sell for much higher than bank-owned properties, but their sale prices never get recorded. Since appraisers use recent similar sales to help with their analyses, this absence of sale information throws off the final valuation, rendering the appraisal ineffectual.
If you’re looking for property but aren’t sure how to buy land, please consider contacting a realtor through AllAcres. What’s more, our online directory is a widely respected resource for acres of land of land for sale, from ranches to hunting land to commercial land for sale. Conversely, if you need to advertise your land for sale, AllAcres can help: we will expose your property to a wide audience of potential buyers so you can sell your rural or commercial land for sale quickly and easily. Contact us online or call 855-227-3741 to learn more.