An appraisal is a licensed professional’s unbiased opinion of a home’s value at a specific time. This estimation of value primarily serves to protect the interests of buyers and lenders. Buyers don’t want to pay more than a home is worth. And lenders want to ensure that the collateral, which is the home, justifies the loan. However, there are also advantages for sellers to get an appraisal.
When is an Appraisal a Good Idea for Sellers?
Internet websites such as Zillow and Realtor.com provide home buyers access to an abundance of real estate data. While this is convenient for buyers, the data is often inaccurate. Moreover, this problem is widespread when it comes to the website’s estimated value of Las Vegas luxury homes. These websites don’t account for the value of custom finishes, views, lot position, etc. What’s worse is they often don’t assign the proper value to guard gated communities.
Custom homes with views and high-end amenities have a thinner sales market, especially at higher price points. If your property is unique, buyers’ agents may not be able to support your sales price by comparable sales. Having the opinion of an impartial third-party appraiser can eliminate confusion and help justify your asking price.
Using the Appraisal to Your Advantage
Over half of the luxury home buyers in Las Vegas use a mortgage for their purchase. When a buyer applies for a loan, their lender has its own appraisal done. The bank will only loan a portion, typically 80%, of the appraised value. Here’s a good example:
A buyer contracts to buy a home for $1,000,000 and the bank requires a 20% down payment. So that’s an 80% loan-to-value (LTV). In this case, if the home appraises for $1,000,000, the bank will lend $800,000. The buyer then has a down payment of $200,000. However, if the home appraises for $900,000, the bank will still only loan 80% or $720,000.
It’s a red flag for the buyer if the appraisal comes in below the sales price. In this example, the buyer would have to come up with an extra $80,000. Buyers don’t like unwelcome surprises. More to the point, no one wants to overpay for their home. Therefore, when the appraisal falls short, the buyer often calls off the sale. So getting an appraisal to justify the sales price for your luxury home can be to your advantage.
Actual Las Vegas Luxury Home Transaction Success
In an actual transaction, one of our listings had a higher sales price than the recent sales in the neighborhood. But the home, in this case, had complete interior renovations. The inside of the home was as up-to-date with custom finishes as any buyer could want. We had a lot of interested buyers, but they had a hard time justifying the price. The buyers only became comfortable paying the sellers price after they saw the appraisal we advised the seller to get. Again, having an appraisal was a huge benefit to our seller.
We also recently had an all-cash deal where our listing went into contract at $1,350,000. The buyer’s appraisal came in at $1,300,000. However, upon review, we found there was no accounting for certain items. This property had nearly $400,000 in upgrades! So our seller paid for a second appraisal, which came in at $1,370,000. With that appraisal in hand, the buyer felt comfortable paying $1,350,000 and the sale closed.
Is a Luxury Home Appraisal Right for You?
An appraisal is not a one-size-fits-all solution. Not every Las Vegas luxury home should get an appraisal. We work closely with our clients to employ the best sales and pricing strategy. If you’re selling a unique Las Vegas luxury property, you should at least consider an appraisal. This is true regardless of how far along you are in the selling process.
We have a long history of successful high-end residential sales. We also make sure the sale closes at the highest possible price. Please call us at 702-605-7480 with any questions including whether an appraisal is right for you. You can also email me at firstname.lastname@example.org. I reply to every email personally. Hope to hear from you soon! – Rob Jensen