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The information on this site does not modify any insurance policy terms in any way. Home appraisals are conducted by a professional appraiser to give an estimate of the market value of a house or property. In some instances, home appraisals can come in low because values have been declining in the neighborhood, improvements need to be made to the dwelling or the buyer has simply offered too much. Appraisals are important to mortgage lenders because they ensure that the institution does not approve a loan to a borrower for more money than the property is worth, says Al Graham, regional manager of Georgia, Alabama and Florida at Silverton Mortgage.
The appraisal also protects the buyer from overpaying for a property. Home appraisals are also important because lenders can use them to help borrowers determine how much they can reasonably can spend on a home or find out the current value of properties they want to purchase, says Rose Sklar of The Sklar Team with Coldwell Banker Realty in Weston, Florida.
Homeowners also seek appraisals when refinancing their mortgage or obtaining a home equity loan or a home equity line of credit. This ratio is very important from both a qualification and pricing standpoint.
A low home appraisal could delay your home sale, which can be problematic if you have started the process of buying another home. If you have immediate changes planned such as moving for a job or a divorce, a low appraisal can make it harder to sell your house at the price you had hoped to obtain. A low appraisal can also mean the house could be on the market for a longer period.
Buyers are sometimes deterred by homes that have been on the market for many months, perceiving that there are problems with the house or asking price. Currently though, the housing market is especially competitive, so this may be less of a concern for most sellers than it was pre-pandemic. A home appraisal is a critical component in the home buying process, as it determines the value of a property. When making an offer on a Realtors use appraisal addendums to win multiple offer situations, that's how important the role of an appraisal is to both buyers and sellers.
Understanding how the appraisal process works can help both buyers and sellers properly prepare, as there are several key items an appraiser will look for when conducting a home appraisal. Last week we wrote an article on what do home inspectors look for and this week we are writing about what appraisers look for! Let's dive into our article that answers the question: What do home appraisers look for?
In this article, we will discuss how the home appraisal process works, what to expect before, during, and after a home appraisal, and how to properly prepare for appraisal day. While the appraisal process may sound daunting to both buyers and sellers, there are several ways to adequately prepare that will help your home appraise. A home appraisal is an estimate of the home's value.
It is typically determined by having a licensed appraiser inspect the home and researching the price homes have recently sold for in the area.
Prior to buying a home , a mortgage lender will require a home appraisal to ensure the home is worth the amount the seller is asking. Homeowners may also request an appraisal when refinancing their mortgage. After the appraisal is complete, the mortgage lender will determine how much they will lend for the property.
So what do appraisers look for during a home appraisal? When comparing your home to other homes in the area, they will primarily take the size and overall condition of your home into strong consideration when conducting their analysis. If you own a 3-bedroom home in Raleigh, North Carolina, they will compare the amount of similar 3-bedroom homes have sold in the Raleigh area when determining the value of your home. Before getting too granular, the appraiser will note general details in the home, such as the materials used throughout the home, the condition of the property, and any alarming physical aspects of the property that may impact its habitability.
This is one of the first things appraisers look for! If anything seems structurally unsound or unsafe to live in, they will take note. They will also scan the home's overall upkeep, such as missing door handles, leaking faucets, and other maintenance-related issues.
Appraisers will look at the home's location. When conducting an appraisal, the appraiser will consider where the home is located. Location plays a critical part in valuing a home. They will assess whether or not the home is located on a busy road and if it is in close proximity to owner-occupied homes, renter-occupied homes, or foreclosed properties.
In a highly desirable area like Plaza-Midwood or Myers Park which are two of Charlotte's best neighborhoods , homes will be valued far higher than less desirable areas. Appraisers will also consider the surrounding homes in the neighborhood. Are they primarily single-family homes, apartment buildings, or commercial properties?
One thing many people don't account for that appraisers look for is the age of the home. Older homes are sometimes maintained far more and are located in historic districts whereas newer homes may come with problems. Nonetheless, the age of the home will play a role in the appraisal process. New Construction always is valued higher than homes built a century ago. A home appraiser will take time reviewing the exterior of the home to ensure it is structurally sound.
They will look for any signs of water damage or other problems, such as a chimney that is cracked or leaning away from the home which could indicate structural damage along with a lopsided porch or stairs leading up to the home.
If you are aware of your home's roof problems, speak with your real estate agent prior to spending tens of thousands of dollars to repair it. It may be more cost-effective to lower the asking price of your home rather than putting tons of money into installing a brand-new roof. In addition to the roof, the appraiser will also inspect the condition of the siding, garage, porch, deck, and any other exterior elements.
If the home is outdated, it will appeal to a limited number of buyers and may be more challenging to sell. Water damage brings a host of issues in a home, including mold, mildew, rotting, and more. Home Ownership. Let us help clarify the home appraisal process. During the home-buying process, obtaining a home appraisal is a critical step.
What is an appraisal? How is it used? A home appraisal is an unbiased estimate of the true or fair market value of what a home is worth. The appraisal can include recent sales information for similar properties, the current condition of the property, and the location of the property, i.
Who appraises the home and how do I know they will do a good job? While no appraiser is infallible, his or her opinion of the value of your home is informed by rigorous training, numerous tests, several years of on-the-job experience and required continuing education. Appraisers and their employers often appraisal management companies are heavily regulated.
Consequences of issuing deliberately misleading or biased reports can be severe, so appraisers work hard to remain impartial and keep personal value judgments and prejudices out of their work. What are Appraisers really looking for? Most lenders review appraisals through a strict system of checks and balances that compares the appraisal report to other appraisals on all known sales in your neighborhood.
This internal review system can catch discrepancies that should be investigated, but any information you can provide to your lender will help. Click here for our infographic showing how the appraisal process works.
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