Understanding bank appraisals
The appraisal value is the estimated figure determined by a certified professional so the bank can calculate its risk when lending you money. Generally, a bank will finance 80% of the lower of the two: the appraisal value or the purchase price. This assessment is based on strict regulations and recent comparable sales.
Market value is what you pay
On the other hand, the market value is dictated by supply and demand. In hot markets, the asking price can significantly exceed the official bank appraisal. If you're relying on a mortgage, this difference means you'll have to cover the gap with additional out-of-pocket savings.
How to prepare
Before leaving a holding deposit, investigate real prices in the area and compare properties. A smart tactic is to include a protective clause in your contract if the appraisal returns low. But above all, rely on Hogar Global: our platform allows you to apply technical checklists and compare the true costs of the properties you visit. Sign up for free on Hogar Global and avoid overpaying for your next home.