If you’ve found the right home, how can you be certain you aren’t paying too much? Once you make your choice, it’s quite likely you’ve also become well informed about property values. How is this so? Because before you made that choice, you looked at other homes in your price range. You did some “comparison shopping.”
As you visited each home, you made value judgments based on size, features and amenities offered, as well as the condition of the homes. Without realizing it, you compared prices, looking for the greatest value for your dollar.
Nevertheless, another aspect of your purchase further protects you from purchasing an overpriced home. It’s called an “appraisal,” and it’s a required step in the mortgage approval process. Your mortgage lender, who is putting up the majority share of the purchase price, also wants to be sure the home is not priced above the market value.
Thus, the lender asks a licensed appraiser to determine the home’s value for them. If the appraised value does not at least meet the purchase price, the lender may not approve the loan.
As the buyer, you’ll find that it will be easy for you to spot the overpriced homes. Do some comparison shopping and choose the home that’s right for you. It’s the best investment for your family and your future.