With 2,600 square-foot homes in the St. Louis area appraising for $599,000 or more, you might be wondering how much that home you are eyeing is worth.

Or possibly, you are looking to get into a new home and need to know what your current St. Charles-area residence is worth so that you can upgrade or downsize.

In either case, you’ll need a home appraisal for both your new loan and possibly to get a handle on what your current home can demand from the market.

Sellers will sometimes disagree, and buyers will often try to haggle, but at the end of the day, an appraisal is the best way to determine how much your home is worth in the eyes of the one party that matters the most: the bank!

In the following article, we’ll discuss what appraisals mean for the St. Louis real estate market and why they can impact your home sale.

Home Appraisal Basics

For the most part, an appraisal is for the buyer’s mortgage lender. They want to know that when they issue a loan for a new home, it is worth the amount of money they have lent if they need to foreclose and sell the home themselves.

This hardly ever happens. Since the mortgage crisis of 2008, lenders have been scrupulous about who gets a loan and what properties they back.

Financial background checks are rigorous, and title searches for a property are standard practice during the home buying and selling process.

When a bank appraises a home, they are looking at the value of the property and the state of the residence.

They compare, say, recent St. Charles real estate sales with comparable deals in the same neighborhood. Flaws and improved features of the home will also inflate or devalue the appraisal accordingly.

Home Appraisal vs. Home Inspection

The appraisal is different from the home inspection. The buyer will schedule the home inspection with a third party — usually a former or current contractor with a detailed knowledge of all aspects of homebuilding.

The home inspector issues their report to the buyer, and it will include any trouble spots the buyer may want to take up with the seller before the deal goes through.

Water drainage, electrical issues, and features that do not meet local construction codes. Once the report is issued, the buyer and seller can negotiate over the trouble spots.

The appraisal report is ordered by the buyer’s lender and sets the value of the home. So you can still buy a home that appraises for less than the price you agree for, but you’ll have to pay the difference out of your pocket.

This was an issue over the summer in St. Louis and St. Charles. A bidding war would spike the price of a home, but the bank would only back the appraised amount. The difference, sometimes $10,000 or more, between the appraisal and the final home price was made up by the buyer in cash.

Need Expert Advice?

At Sarah Bernard Real Estate, we try to ensure that buyers are not overpaying for houses, especially at prices that banks won’t back. A home appraisal is one of the essential steps in the buying process, and we help guide buyers (and sellers!) through the whole process.

Are you looking to buy a home in St. Louis or St. Charles area? Contact the professionals at Sarah Bernard Real Estate today.