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Buying a home is a complex process, where you want all the pieces to fall together in your favor. If you’re planning on buying a new home in the near future, here are a few questions that can help you understand the appraisal process:
• What is a home appraisal? A home appraisal is an estimate of a home property’s value. Property value is based on factors such as location, amenities, structural condition and recent sales of similar local properties. A home appraiser will walk-through the property, noting anything that can alter the home’s value.
• Why do you need a home appraisal? When you go to buy a house, your mortgage lender will want to know whether the house you are interested in buying is worth the amount you are willing to spend. If your home appraises low, it can cause a lender to reconsider the amount of your loan.
• Who conducts the appraisal? A licensed professional who is certified in home appraisals will determine your home’s value. They are knowledgeable in real estate and are required to know how to evaluate a property on factors such as neighborhood growth, housing trends and market conditions. A home appraiser is usually hired through your mortgage lender.
• What does an appraisal entail? Appraisals access many different features of the house, including square footage, updates or improvements, the overall condition of the house and any major damage present. An appraiser collects data about the neighborhood, recent sales and new listing. After the appraiser gathers all of this information, they then assign a value to the house. Since home values fluctuate according to the market, each appraisal has an expiration date.
• What happens if a property appraises for less than expected? A lower appraisal can cause a lender to reconsider financing your mortgage and/or give options for a different loan product.
• What can I do if the home appraises low? If your financing falls through with a low appraisal, you can try to renegotiate your contract with the seller. You can also put more money down than originally anticipated. Your Lender may get a second appraisal.
As with many home sales, a low appraisal may be something that can be overcome with negotiation and compromise. A good lender wants your business and is willing to work with you to help you get into a new home.
When you’re ready to buy a new home, contact a Shorewest Agent today!
Categories: Home Buying
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