You must have heard about the importance of home appraisals at the time of buying and selling the home. This is an assessment done by a professional and licensed appraiser to make the concerned aware of the price or worth of the property. A home appraisal is considered a reliable and trusted method to know the valuation of a home. It is done by a neutral or independent party to suggest a fair valuation without any biases.
Whether it is a tract of land or a home or a skyscraper, the appraisal is important to protect buyers as well as sellers and lending institutions.
Let us understand everything you need to know about appraisals, which are a significant part of buying and selling a house process.
What is a home appraisal?
It is essential to know about what is a home appraisal, information about the appraisal process, why is it needed, and what is considered for getting the same done. To know all the benefits and tips to make the appraisal happen smoothly, let us know what exactly is the home appraisal.
A home appraisal is a way to assess the value of the property. The same is reported and presented by the licensed appraiser. An appraiser conducts a home inspection and considers various factors that can rightfully suggest the price of the property such as home size, the sale price of nearby properties, home condition, etc.
The difference between the appraisal value and market value
Talking about the appraiser’s value, the same is decided by many factors. The determinants include CMA or comparative market analyses, home inspection, finding whether the listing price is correct for that location, etc. Coming to the market value, is the price that the buyer may want to pay for a home. In other words, it is the price of the homes of comparable value.
Many sellers find themselves worried at the time of deciding the price of their home. This is when the home appraiser can help you. The appraiser can help you with the closet and the best price for your home and give you some peace of mind. Consulting with an appraiser will help you know the price you need to set for your home. They determine the home price by evaluating the comparative values for the neighborhood, property documents, home tours, and more.
What are the things considered in home appraisal?
Now that you know What is a Home Appraisal, here are the information sources that the appraisers would like to have.
- The appraiser’s inspection needs:
- Details on the status or the condition of the property.
- The inside and outside home layout along with its features.
- Home updates.
- The evaluation of the quality of home construction.
- The size of the square footage of the home. The terms like gross living area or GLA may be used in the report. The appraiser also considers the areas like garages, under-construction basements, etc. though they are estimated separately.
- Permanent fixtures of the home like in-ground pools and not above-ground pools.
- When the home inspection is complete, the appraiser presents a report mentioning their take. They express their professional opinion about the property and what should be the price of the home.
Sometimes the lender demand reports are called the “Sales Comparison Approach” or “Cost Approach.” These can be prepared using different methods. These reports also suggest the value of the home.
Home appraisal details
Here are some vital things that you need to know about a home appraisal.
- Usually, the buyer pays the appraisal cost. Sometimes he may negotiate and ask the seller or lender to pay.
- As per the lender, the appraisal cost can be paid in advance or become a part of the overall application fee. Sometimes, the cost is paid at the time of delivery or at closing.
- The costs of appraisal are somewhere around $275 to $600, as per the locality.
- It takes around an hour for the inspection. Sometimes the appraisal is complete within a few hours or minutes. The inspection depends on the size of the home and the complexity of the property as well. The appraiser may also need time to retrieve county records to know the values of the home around your area.
- This report is provided to the lender, loan officer, real estate agent, etc. in a week.
- The sellers usually do not get a copy of the appraisal report, which is scheduled by a buyer. You also need to know that as per the Equal Credit Opportunity Act, the buyer has the right to receive a home appraisal report copy in case they want it.
What happens when the appraisal turns out too low?
Now, the condition of the low appraisal may create a problem. if there is a considerable difference between the purchase price and the appraisal price, then the issue is big. The seller’s agents and the buyer’s agent may find the price of the recently sold comparable homes. This can create an impact on the appraisal. In case the final appraisal is still below what you have offered to pay, you can re-negotiate the home price or chuck the deal.
How to get the appraisal done smoothly?
It is good to ensure that the appraisal happens smoothly. This can be done if you provide all the information and documents to your appraiser and help them get the job done quickly.
You need these documents to furnish:
- The writeup of the reason why you want to get this appraisal done
- The tentative date by which you want the appraisal to be done
- A copy of the property deed, buying agreement, or other property papers.
- A map of the property mentioning the property’s dimensions. You can get the same online from the county assessors.
- In the case of a mortgage, you need to submit details about your provider, the date you got your mortgage, the amount of the mortgage, the type of mortgage, the interest rate you are getting, and more.
- Current real estate tax bill copy, special assessments statement copy, balance details, etc.
- You need to inform the appraiser whether you have listed your property for sale. If yes, what is the asking price and agency you are working with?
- The appraiser also needs to know the offers you are getting.
- For income-producing properties, the appraiser needs to be informed of the breakdown of income, expenses, etc. for a couple of past years.
- Copy of leases
- Original house papers.
- Home improvements bills
Home appraisals are important to know How much money do you need to buy a house. The banks and lending institutions know professional and good-quality appraisers. You can connect with the lending institution and they will help you with a qualified appraiser