What you should know about home appraisals.
Do you know what a home appraisal is, or why it is so important for you to have? Many people misunderstand this crucial component of the home buying experience. In essence, an appraisal is a valuation of your home – it is needed to ensure the homebuyer, the home seller, and the mortgage lender receives the accurate value of the real estate in question.
Generally, you can choose your real estate agent and lender, but you cannot choose your appraiser. The appraiser will be chosen by your lender to provide a level of independence from the buyer and seller. This helps to produce an unbiased report on the worth of the house.
The most important component involved in arriving at a property’s value is called comparable sales, or comps for short. These are similar properties, usually located within a mile or so of your property, that have sold within the last 90 days. The appraiser will compare the home’s features against the comparables’ features to get a better understanding of the home’s value. Factors range from square footage, appearances, amenities, and condition. The appraiser will take special note of improvements that greatly add value to a home. These include new flooring, kitchen and bathroom remodeling, adding living space in a basement, and additions to the property.
Once the appraiser has inspected the property, he or she will provide a written report with their analysis and conclusions about the property’s value. If the home appraises at or above the purchase price, then you’ve completed a major step in the home-buying process and can move towards closing! Sometimes, a home will appraise for much less than the agreed-upon purchase price. Generally, you will have a legal way out of the sale if the appraisal comes in too low. Another option is to renegotiate for a lower sale price based on the appraised value.
Have more questions about the home appraisal process? Buying a home is no small feat, so it pays to have a trusted, experienced professional on your side! Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.