The Importance of a Home Appraisal
If you need a loan when you buy a home, you’ll almost always need a home appraisal.?
Home appraisals are helpful for two main reasons. Appraisals protect you as a buyer. And, appraisals protect the banks that are lending you money.
Protecting Your Interests
As a buyer, you don’t want to get caught up in the emotions and the market. It’s easy to allow these to drive you too far, and then you overpay.?
The first line of defense is to have me run an analysis of what was recently sold in the area that you are considering purchasing. You’ll receive an email that shares links to recent sales, so that you can do the analysis on your own, too!?
The second line of defense, so that you have further protection, is to involve a third party.?
The home appraisal is a third party’s opinion of what the home is worth. The appraiser’s job is to look at what else sold in the area to decide what he believes your house is worth.?
This opinion should give you confidence that you are not overpaying for the home.?
Protecting The Lender’s Investment
The home appraisal also helps give the bank confidence that their investment is safe.?
An appraiser will go out to the home, and view it in person. Then, he will drive the neighborhood and look at photos of other homes that sold in the recent past. The closer to the home you are purchasing, the more likely the appraiser will take the home sale as a “comp” or a “comparable sale.” He will also look at how big the home is, upgrades, surroundings, and more.?
The appraiser then creates a report that is pages long and shows how he came to the conclusion on price. Your lender will send that report to you, so that you and I can review it and check the appraiser’s work.?
What If Your Home Does Not Appraise?
In the customary contract, if your offer is higher than what the appraiser thinks your home is worth, you have three options:?
Typically, an appraisal will cost you at least $500, and can be considerably more, depending on the size and value of the home.?Because appraisals cost money, it’s a good idea to ask me to put on my “appraisal hat” early.?
It’s not a good idea to just throw a number out there when it comes time to offer, because the house may not appraise and the seller may not be willing to budge on price.?
That means you’ll pay for the appraisal, but can’t complete the purchase. Remember, the bank won’t lend you more money than what the appraiser says the house is worth.?
If you have more questions about the appraisal process, appraiser contacts, or what goes on in an appraisal, contact me! My number is 480-639-9640.