Home appraisals are a necessity whether you are buying or selling a house. Appraisals help determine the value of a home and lenders use this information in deciding whether or not to approve a mortgage and how much financing a lender should have.
A home appraisal is simply an assessment of a property’s value based on the condition and features of a house. They are conducted by certified professionals licensed to determine home value. Make sure you use a unbiased certified appraiser.
Don’t mistake a home appraisal with a home inspection. As stated earlier, an appraisal is designed to determine the home’s overall value; the home inspection is designed to alert prospective home buyers to any potential problems with the home that may result in expensive repairs later on. Inspectors pay more attention to the home’s structure as well as systems like heating, electrical and plumbing.
Included in an appraisal is determining the homes actual square footage – this excludes a finished basement and external attachments such as a deck or front porch. An appraiser will note any improvements and upgrades to the home like a remodeled kitchen, central air or additions to the home. Even though an appraiser will also note things like water damage or structural damage, it is not an inspection.
But don’t worry, neither an appraiser or inspector will look at the cleanliness of your home nor will they inspect your appliances.
An appraisal takes into account external factors like location, any recent foreclosures in the area and any significant changes in the neighborhood that could change the market value of the home. These changes could be positive such as a neighborhood on the rise or negative such as zoning changes.
Something that is important for you to know is that there are time restraints on appraisals. An appraisal will expire after 6 months (in some rare occasion 9 months), then a new appraisal will be needed. The reason being is, as we know, the market is in flux at the moment which will affect the final appraisal report. Not to mention within that time a neighborhood could change or issues can occur with the home during that time as well.
Know your rights when it comes to an appraisal. If you feel an appraiser left out information or misrepresented information, you have the right to dispute the values listed in the final report.
Find out what your options are with your specific lender as all lenders may have different policies. Your lender should allow for another appraisal from a different agency. Be aware that if talks with your lender and the original appraiser, you can final a complaint with your state’s local appraiser licensing agency. Make sure if you go that route that you have more than enough evidence of the inaccuracies in the report.
Make sure the house is priced appropriately for the market, if it isn’t you may get a low appraisal. When a house is priced correctly, it will be easier to get the proper financing. If you have doubts about pricing your home for sale or the asking price for a property you’re interested in, consult your real estate agent.
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