What Everybody Ought to Know About a Home Appraisal

You’ve found the home that meets your needs and are ready to make an offer. Before you can actually get through the door, however, you have to go through the home appraisal. A home appraisal will determine how much the home in question is really worth. The worth or value of the property will in turn determine how much your lender is willing to give you to buy the home.

The What and The Why

In short, a home appraisal is the part of the mortgage process when a state-licensed and certified real estate appraiser determines the value of a property. This professional is an independent third party who can have no financial stake in the outcome of the appraisal. Lenders generally require a home appraisal if you are using the home as collateral for the loan. It ensures that the property is worth as much as the bank will be investing, and keeps buyers from overpaying for a home.

The How

A home appraisal is paid for by the buyer as a part of the home loan process at closing and costs around $300, depending on the price of the home. An appraisal notes and includes details including an estimate of how long it will take to sell the home, where the home is located, how the type of area it’s in will affect the value, how the property compares to three other similar properties in the area (comps), and any draw backs to the property (foundation, access, condition, etc). The appraiser will also look at lot size, square footage, the materials making up the interior of the home, fixtures, improvements made to the home, the foundation, exterior condition of the home, systems (air conditioning, sound system, security system), and outdoor features (pool, deck, etc). Check out this uniform residential appraisal report from Freddie Mac for a better idea.

The appraisal is normally carried out in three steps, including a physical visit to the home (a few hours), a comparison of the home to comparable properties in the area that have recently sold, and the creation of the report (all together taking about seven days).

If You’re the Seller

If you’re the home seller and want to make sure your home gets appraised for at least the amount it’s listed for, there are things you can do to positively impact the appraisal.

First off, clean your home or hire someone to do it for you. A clean, well-kept house tends to net a higher appraisal. Tend to the home’s exterior and up its curb appeal by pulling weeds, mowing the lawn, and touching up peeling paint. Make small improvements like fixing holes in the drywall or getting rid of unsightly stains in the carpet. If you can, provide the appraiser with a list of comparable homes that have recently sold. Although they will do this regardless, it’ll be nice for them to know you did your research before settling on a listing price. Lastly, provide the appraiser with a list of improvements and updates you’ve made to the home as well as a list of the positive aspects of your neighborhood (including new grocery stores, parks, schools, etc).

 

In Closing

Although there is no fixed expiration date on an appraisal, many lenders consider them outdated after six months. You are allowed to accompany the appraiser during the home appraisal and have the right to view a copy of the appraisal.

If you’re unhappy with the appraisal, most lenders have appeal procedures called “Reconsiderations of Value.” If you’re aware of home improvements or recent, comparable sales that were unavailable or weren’t considered by the appraiser, provide this information to your lender. If there were legitimate problems with the first appraisal, you can always obtain a second appraisal. Furthermore, lenders are required to report legitimate complaints.

Overall, home appraisals are normally carried out in a professional manner and provide added security to the buyer. If the appraisal comes out at a markedly lower price than the listing price, you may have dodged a bullet.

By HouseHunt

First Choice Title Services & Escrow, Inc
3 SW 129th Avenue, Suite 202
Pembroke Pines, FL 33027
http://www.firstchoicetitleservices.com/
Phone (954) 433-7680
Fax (954) 433-7355
maria@firstchoicetitleservices.com