Appraisals are regarded as being an essential aspect of purchasing a home as it’s used to determine the value of a given home. Lenders typically require appraisals before they provide a mortgage. Licensed appraisers are tasked with the responsibility of providing an accurate report of the home’s value. We take a deeper look into what an appraiser does as well as some factors they look at to determine a property’s value.
What’s A Home Appraisal?
A home appraisal helps to determine the fair value of a house. An appraisal can occur during the refinancing or home buying process. The appraiser’s responsibility is to ensure that you or the lender is paying the price of what the home is actually worth. You can negotiate the home appraisal prior to establishing a contract or even if you’re already under a contract.
How Long Does It Take?
The process itself is very brief. It can take anywhere from 60 minutes to 6 hours. Appraisers are responsible for conducting several things when looking at a property. For starters, they’ll have to take pictures on the property. Photos could include pictures of the building’s overall layout or quality. Some photos may consist of deficiencies that they find. When it comes to results, appraisers typically take a week to finalize their report. As a home buyer, the law stipulates that you’re supposed to get a copy of the report within 72 hours. It’s important to note that when you review the report, you should ask questions as well as to ensure that the details are correct. The law stipulates that appraisers have to correct reports, if you notice an incorrect detail within the report.
Can You Trust An Appraisal?
Yes. Appraisers are licensed and certified. They are essentially third parties who give financial analysis to mortgage lenders. Because of the certification process, they are very talented at what they have to do. They are also regarded as being neutral third parties. So, they don’t get compensation whether or not you decide to purchase a home. Even though they work to ensure that mortgage lenders are paying a fair price, they also help to ensure that you don’t overpay as well.
Are Appraisals Mandatory?
No. If you have enough money to purchase a home, and do not need financial help from a mortgage lender, you don’t need to get the property appraised. But, regardless if you aren’t using a lender, it doesn’t mean that you shouldn’t get an appraisal. The bank uses appraisals to ensure that they don’t overpay, so why shouldn’t you ensure that you are overpaying as well? When it’s all said and done, even though an appraisal can cost hundreds of dollars, it could save you thousands.
Factors Appraisers Take Into Consideration
- Home’s Exterior – The appraiser will evaluate the structural integrity of the home such as the walls, roof and foundation. The home exterior check will help to determine the function of the aforementioned components. For instance, if the appraiser determines that the foundation or roof has several issues, they may deem a home as being unlivable. The appraiser will also evaluate issues with the property’s gutters, siding and age. They’ll also look for cracks, leaks and other signs of water damage. Other external factors they may check include dead frees, the property’s observable condition and flood prone areas.
- Size Of The Property – Another important aspect of the appraisal is the size of the land the home is on and the size of the home itself. An appraiser will take a look at the home’s layout, the total square footage and number of bathrooms and bedrooms. This is because the more bathrooms and bedrooms a home has, the higher its value as most buyers strive to acquire property that has the most bedrooms and bathrooms.
- Home’s Interior – In the eyes of an appraiser, a home’s exterior portions are just as critical as the interior portions of it. Appraisers tend to check the condition of flooring, electrical/plumbing systems and windows. They’ll also see if they can find safety issues such as handrails or fire escapes. If the property underwent a major renovation project, the appraiser will check to ensure code compliance. They’ll also itemize fixtures and appliances such as refrigerators, ovens, washers and dishwashers.
- Quality Of Home Improvements – An appraiser will also evaluate the quality of any home improvement projects that’s been made to the house. Quality upgrades will help to increase the property’s overall value. For instance, a newly renovated HVAC system, bathroom, kitchen, garage or attic can have a lasting impact on the value of the house. They’ll also evaluate any amenities the property may have such as a patio, fence, fireplace or porch.
- Comparable Sales – The neighborhood the home is located in, as well as the location of the home itself, will have an impact on its value. Appraisers use a tactic that’s known as comparable sales where they compare the prices of other homes within the neighborhood that are similar in construction type, size and age.
Negotiation Outcomes
Getting an appraisal can help to negotiate a better price than what the buyer is asking for. This is called appraisal negotiation. There are three possible outcomes that can occur, as a result of an appraisal negotiation. The first of which is that the seller agrees to your terms and lowers the price to what the appraisal entails. The second scenario occurs if the seller attempts to negotiate back. If the seller tries to negotiate a higher price than the appraisal, you’ll have to determine if the additional expense is worth it. Finally, the seller can choose to ignore the appraisal and stay firm as to what they expect they should be paid, regardless if it’s higher than the appraisal amount.
What If We Fail To Reach An Agreement?
Unfortunately, statistics indicate that as much as 17% of all real estate delays occur as a result of appraisal issues. In a situation like this, you should simply back out of your deal.
Appraisals are regarded as being an essential aspect of purchasing a home as it’s used to determine the value of a given home. Lenders typically require appraisals before they provide a mortgage. Licensed appraisers are tasked with the responsibility of providing an accurate report of the home’s value. We take a deeper look into what an appraiser does as well as some factors they look at to determine a property’s value.
What’s A Home Appraisal?
A home appraisal helps to determine the fair value of a house. An appraisal can occur during the refinancing or home buying process. The appraiser’s responsibility is to ensure that you or the lender is paying the price of what the home is actually worth. You can negotiate the home appraisal prior to establishing a contract or even if you’re already under a contract.
How Long Does It Take?
The process itself is very brief. It can take anywhere from 60 minutes to 6 hours. Appraisers are responsible for conducting several things when looking at a property. For starters, they’ll have to take pictures on the property. Photos could include pictures of the building’s overall layout or quality. Some photos may consist of deficiencies that they find. When it comes to results, appraisers typically take a week to finalize their report. As a home buyer, the law stipulates that you’re supposed to get a copy of the report within 72 hours. It’s important to note that when you review the report, you should ask questions as well as to ensure that the details are correct. The law stipulates that appraisers have to correct reports, if you notice an incorrect detail within the report.
Can You Trust An Appraisal?
Yes. Appraisers are licensed and certified. They are essentially third parties who give financial analysis to mortgage lenders. Because of the certification process, they are very talented at what they have to do. They are also regarded as being neutral third parties. So, they don’t get compensation whether or not you decide to purchase a home. Even though they work to ensure that mortgage lenders are paying a fair price, they also help to ensure that you don’t overpay as well.
Are Appraisals Mandatory?
No. If you have enough money to purchase a home, and do not need financial help from a mortgage lender, you don’t need to get the property appraised. But, regardless if you aren’t using a lender, it doesn’t mean that you shouldn’t get an appraisal. The bank uses appraisals to ensure that they don’t overpay, so why shouldn’t you ensure that you are overpaying as well? When it’s all said and done, even though an appraisal can cost hundreds of dollars, it could save you thousands.
Factors Appraisers Take Into Consideration
- Home’s Exterior – The appraiser will evaluate the structural integrity of the home such as the walls, roof and foundation. The home exterior check will help to determine the function of the aforementioned components. For instance, if the appraiser determines that the foundation or roof has several issues, they may deem a home as being unlivable. The appraiser will also evaluate issues with the property’s gutters, siding and age. They’ll also look for cracks, leaks and other signs of water damage. Other external factors they may check include dead frees, the property’s observable condition and flood prone areas.
- Size Of The Property – Another important aspect of the appraisal is the size of the land the home is on and the size of the home itself. An appraiser will take a look at the home’s layout, the total square footage and number of bathrooms and bedrooms. This is because the more bathrooms and bedrooms a home has, the higher its value as most buyers strive to acquire property that has the most bedrooms and bathrooms.
- Home’s Interior – In the eyes of an appraiser, a home’s exterior portions are just as critical as the interior portions of it. Appraisers tend to check the condition of flooring, electrical/plumbing systems and windows. They’ll also see if they can find safety issues such as handrails or fire escapes. If the property underwent a major renovation project, the appraiser will check to ensure code compliance. They’ll also itemize fixtures and appliances such as refrigerators, ovens, washers and dishwashers.
- Quality Of Home Improvements – An appraiser will also evaluate the quality of any home improvement projects that’s been made to the house. Quality upgrades will help to increase the property’s overall value. For instance, a newly renovated HVAC system, bathroom, kitchen, garage or attic can have a lasting impact on the value of the house. They’ll also evaluate any amenities the property may have such as a patio, fence, fireplace or porch.
- Comparable Sales – The neighborhood the home is located in, as well as the location of the home itself, will have an impact on its value. Appraisers use a tactic that’s known as comparable sales where they compare the prices of other homes within the neighborhood that are similar in construction type, size and age.
Negotiation Outcomes
Getting an appraisal can help to negotiate a better price than what the buyer is asking for. This is called appraisal negotiation. There are three possible outcomes that can occur, as a result of an appraisal negotiation. The first of which is that the seller agrees to your terms and lowers the price to what the appraisal entails. The second scenario occurs if the seller attempts to negotiate back. If the seller tries to negotiate a higher price than the appraisal, you’ll have to determine if the additional expense is worth it. Finally, the seller can choose to ignore the appraisal and stay firm as to what they expect they should be paid, regardless if it’s higher than the appraisal amount.
What If We Fail To Reach An Agreement?
Unfortunately, statistics indicate that as much as 17% of all real estate delays occur as a result of appraisal issues. In a situation like this, you should simply back out of your deal.
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