Home Appraisal: The Hows, Whys, and Why-Nots
Are you buying your dream house? How about taking a professional’s unbiased opinion in regards to the home’s value! Make sense? It certainly does! A home appraisal process is mostly followed in purchase/sale transactions and commonly in refinance transactions.
It helps to determine whether the contract price of the home is appropriate. It considers the home’s location, condition, and features.
If you haven’t considered a home appraisal for your dream house, here are the Hows, Whys, and Why-Nots to help you make the decision.
How the Home Appraisal Value is Determined
Given that appraisal protects the interest of the lender, usually a lender orders the appraisal. The appraiser must be certified or licensed and familiar with the area. He/she must work impartially and should have no direct or indirect personal interest in the transaction. The appraisal value of a property is influenced by the recent sale of the comparable properties in that area. It is also affected by the current market trends.
A home appraisal value typically includes home amenities, number of bathrooms and bedrooms. It also takes into consideration of the square footage and floor plan functionality as the key factors.
Why Home Buyers Should Get a Home Appraised
The primary reason for home buyers to get a home appraised is because it is commonly required by lenders. Almost all lenders order a home appraisal during their mortgage process. The appraisal gives an objective way to check the market value of the house. This also ensures the requested amount of money by the buyer is actually appropriate.
From a buyer’s point of view, it ensures a smooth and trouble-free completion of the mortgage loan process. It allows the bank to avoid getting stuck with any property that is actually worth less than what it invested. It saves the buyer from paying extra for a house even if it is your dream house.
A home appraisal is a factor that is usually emotional for the home buyer. However, buyers’ shouldn’t confuse home inspection with a home appraisal. While home appraisals will certainly make note of all obvious issues, they wont thoroughly check everything. A home inspection will test your air and heat, chimney or determine if the plumbing works. A home appraisal does not.
Why Buyers Should Avoid Home Appraisals
While there is no particular reason to avoid home appraisal, oftentimes it becomes problematic to close a a deal. For instance, if the value of the appraisal is lower than what the lender requires it becomes a problem. To accept the home buyer’s application for the loan, the home seller may need to lower the house price. If they owner does not, the buyer may have to take out extra money to make the deal work.
Indeed, the appraisal value is not the final word. If any party involved in the transaction thinks that the valuation is off, the appraisal can be challenged.
Similarly, an appraisal can be done with two different appraisers on the same property. Each one may come up with a totally different value for the property. This is because an appraisal is the unbiased opinion of the appraiser and not a range or an average. It simply is a number picked by the appraiser after evaluating the data, considering the market and various other factors.