Appraisals: How Can They Be So Different?

By
Mortgage and Lending with Academy Mortgage Corporation NMLS #229617

Appraisals can be kind of confusing. Even if you remain in the exact same home, your original appraisal could look very different than if you were to have it appraised today.

What is an appraisal? It's an in-depth report that shows the exact value of a property based on a number of different factors. Your living space, your view, the year the property was built, and other elements are taken in to consideration in your valuation.

Appraisals are required when you're planning to refinance your mortgage, or when you're looking to buy a new home. An appraiser will assess what the fair market value of a home is in order to come up with a purchase price that accurately reflects their report.

There are a lot of different factors that can affect an appraisal. Here are several things for your to keep in mind.

The Cost Of Appraisals

Appraisals are ordered by lenders, and are conducted by licensed professionals. As a borrower, you will need to pay for the appraisal report, which will cost anywhere from $200 to $500. The cost of the appraisal can be influenced by the type of property, the location, and the square footage of the home. In general, you can expect properties in rural areas and multi-unit properties to cost more.

The Appraisal Process

In order for a mortgage loan to be approved, an appraisal must be performed. Appraisers consider the condition and age of the home, the location of the property, the size of the home and its features, additions and remodeled rooms, amenities like pools or wood flooring, and comparable properties that are similar to the one in question.

After an appraisal report is complete, banks and lenders also order a review. If the review is not in agreement with the original appraisal, lenders may decline your home loan. Overvalued properties are generally not looked upon with leniency.

If you do not use a qualified appraiser, you may find yourself in a sticky situation. Make sure to work with a professional to assess the accurate value of your home. Also note that appraisers don't necessarily check for potential defects in a home. If you require an in-depth look into the potential problems and repairs that may need to be performed on your home, you should hire a home inspector. Inspectors are hired on directly by borrowers.

Final Thoughts

For more information please vist us at www.academymortgageaz.com

 

Comments (3)

Les & Sarah Oswald
Realty One Group - Eastvale, CA
Broker, Realtor and Investor

I just want to add that no two individuals are alike. Hence, different pricing, experience and subjective evaluation on the value of the property. 

Sep 24, 2015 03:26 AM
Les & Sarah Oswald
Realty One Group - Eastvale, CA
Broker, Realtor and Investor

Also...Welcome to Activerain. Looking forward to getting to know you better from your future blogs. Keep up the good work!

Sep 24, 2015 03:26 AM
Gwen Banta
Sotheby's International Realty - Los Angeles, CA

Steve, we run into a lot of problems here in LA - a vast city with extremely different neighborhoods. We often get appraisers who are clueless as to the value of a neighborhood based on schools, proximity to trendy areas, etc. I once has an appraiser who thought the Sunset Strip was a strip mall and couldn't understand the extra value of being a 5 minute drive from there! We challenged the appraisal and were able to get a second, higher appraisal, but the bank averaged the two. The house fell out of escrow. I can tell you this is not an isolated incident. How do you recommend dealing with this?

Sep 24, 2015 03:51 AM