Home Appraisals: What You Need To Know
A home valuation may not be the most important thing when looking to buy, sell, or refinance a home. But maybe it should be like this: A rating determines how much a home is worth for the seller, the buyer, and the lender.
The aim is to protect the buyer and the lender from overpaying.
A home appraisal isn’t the most glamorous part of buying or selling a home, but it is an important step. Learn more about the home valuation process here.
What is a home valuation?
A home appraisal is an objective appraisal of the value of your property. A licensed appraiser with no connection to the buyer, seller or lender provides the home valuation based on the condition and location of your property as well as comparable sales and market trends.
House appraisals are not public records, but appraisers use public property records and other public documents to support their appraisals.
If you want to buy a home, you need a valuation. No credible financial institution will lend money on a home without one. In fact, most real estate transactions require it by law.
The valuation helps the lender understand the value of the home in case the property needs to be sold sooner rather than later.
The bank doesn’t want to be tied to a home that can’t be sold for what you owe for it. The homebuyer should of course not want that either.
At the same time, appraisals can make real estate transactions more difficult. An assessment could show that an agreed sales price with the value of a home is not on target.
Lenders won’t close a mortgage for more than the appraised value of a home. That means buyers may have to pay the difference between the estimated value and the selling price, usually in cash. Otherwise the sale could fail.
What do appraisers look for when evaluating a house?
Appraisers take into account factors that affect the value of your home.
“The appraiser is examining the key features of the property,” said Staci Titsworth, senior vice president, area sales manager for PNC Mortgage in Pittsburgh. This includes square footage, number of bedrooms and bathrooms, overall condition, and health and safety issues, and recently sold homes in the area.
Still, most real estate agents say that comparable sales, or “comps” – that is, sales of homes similar to the one being valued – are most important in home valuation.
How does the home valuation process work? The lender orders the evaluation after you accept the offer and after that Home inspection.
Home buyers often confuse appraisals and inspections. An appraiser and inspector will walk around a house and take a close look at it, but that’s where the similarities end.
The appraiser checks the value of a home, but the inspector looks for defects that can cause you financial problems later on.
However, problems that the appraiser discovers are not ignored. A leaky sink or loose cords could cause the appraiser to request an inspection, Titsworth says.
A home appraisal usually takes one to two weeks. When it’s ready, the lender will get a report, but you can get a copy if you ask for one.
The buyer typically pays for the valuation upon completion, which costs between $ 300 and $ 400.
How can you improve your home valuation?
Before the appraiser comes by, you can take the following steps:
Make sure the property is on tiptoe. The appraiser should be able to see the potential of the home. Your decor may not be a factor, but curb appeal and maintenance can affect the valued value of your home.
Small repairs can make a big difference. This includes basic corrections such as sealing cracks in walls or painting a ceiling that leaks once.
Prepare a list of the last ones handyman. You should know if and when to put on a new roof, siding, or upgrade your stove. These properties can add value to a home.
At the same time, if you’ve spent a lot on repairs and renovations, don’t get too excited. Your $ 30,000 kitchen remodel the assessment can help, but it doesn’t automatically mean your home is worth $ 30,000 in additional value.
How does a real estate agent affect a home valuation?
When selling a home, the agent should provide as much information as possible to assist the appraiser. The idea is to get the retail price you want.
The agent will meet with the appraiser when you sell your home to share the home improvement you have noted and other dates.
Josh Muncey, a real estate agent in Jamaica Plain, Massachusetts, has a folder of comparable homes that justify the selling price.
“We even call other realtors to ask what other properties that have not yet been closed are currently under contract as they are often being sold at a price way above the price, and it’s important that the appraiser has this information, “he said.