You decided to make 2021 the year that you set aside any home-buying myths you previously believed in and purchased a new property in the Westfield area. Congratulations! Part of your house-buying process more likely than not includes a home appraisal. Alleviate some of the stress of buying a house by learning why this is needed and where it fits in with your journey to homeownership.
What to Expect from a Home Appraisal
What is It?
Basically, an appraisal is the valuation of a property provided by an unbiased, third-party licensed appraiser. Unless you pay all cash for your new Westfield house, you need to secure financing for it. To do so, your lender will require a home appraisal. Your mortgage company wants to make sure that the property's value comes in at or above the amount of money you wish to borrow from them. This only takes place after signing a sales contract but before final loan approval.
How Do Appraisers Determine a Home's Value?
Typically, an appraiser uses a standard form called a Uniform Residential Appraisal Report. This form directs them to describe the specifics of the property in question (size, shape, view, zoning). It also asks about the type of utilities, foundation, gutter, and siding. Appraisers look at the general condition of the property and how the interior amenities fit in with other properties in the neighborhood. While not an actual home inspector, they may note potential issues they see (such as water damage or pest problems). They turn their completed evaluation in to the lender when done.
What Happens Next?
If the property's appraised value comes in at or above the agreed sale price, your lender continues working through your home loan application. But if it does not, you have three options. First, you can use this information to negotiate a lower sale price. Second, you can come up with the difference between the sale price and the appraised value as part of your down payment. Or third, you can walk away. If your sales agreement includes an appraisal contingency, you walk away with your Earnest Money Deposit as well.
Who Pays for It?
This falls under the buyer's responsibility. Your lender orders the home appraisal. In turn, they charge you a fee for the appraisal. Most of the time, it runs a few hundred dollars.
Finding a Westfield home you love and putting in an offer is just the first step in the journey to homeownership. This process tends to become stressful to many people. Knowing what to expect helps ease that stress a bit. When you decide you want to start your Westfield home search, contact me.
Originally posted on my Westfield area luxury real estate blog here: https://www.luxuryhomesnj.com/westfield-buyer-tips/home-appraisal-explained/.