Ultimate home appraisal checklist
Getting a home appraisal can be a daunting task, but it is worth the effort! Here is everything you need to know about appraising a home and the benefits to you.
What is a home appraisal?
An appraisal is when someone examines your property’s value. It is preferably done by a licensed expert to attain the most accurate estimate. You can also get a fair estimate beforehand with our handy forms below.
Certified appraisers are regulated by laws to give a fair market estimate. This means they have to give an appraisal based on a set of criteria-not the best price to guarantee a loan. Even if the appraiser comes from the lender you plan to use; it is not a guarantee that they will appraise in favor of the loan.
Who pays for the appraisal?
Typically, the buyer is the one to pay for the appraisal as it ties into their ability to apply for a mortgage. A seller may also elect to do an appraisal to sell their home at a competitive price.
Appraisals typically range from $200 to $500 dollars, depending on the company and your location.
Why does a buyer need a home appraisal?
A home appraisal helps you get the right value when you apply for a mortgage or other loan. It is also helpful if you need to refinance your loan or mortgage later. Without an accurate estimate on your property’s value, you can not use it as collateral toward your mortgage or loan.
More importantly, an appraisal helps you measure if the home purchase offer is a ‘good deal’ in terms of real estate and property costs.
What is evaluated to determine a fair appraisal price?
The home’s appraisal price is determined by a number of factors. During the appraisal inspection, your appraiser will look at things like:
- The location of the home. Homes close to desirable destinations like lakefronts, schools, entertainment districts, or corporate offices tend to appraise higher than rural properties.
- The views from the home. A home with a scenic view will price higher than one walled in by brick or overlooking a broken-down lot. This is why HOA’s tend to be especially strict about your home’s outer appearance- it affects your neighbor’s home value!
Details people typically look for in a home such as:
- The selling price of similar homes
- Overall condition of the home and size of the property
- The type of heating and cooling available
- The number of bedrooms and bathrooms
- Details like the materials for the countertop, the trim and molding, and the quality of floors and carpets.
- Extra features like pools, gazebos, and fireplaces
- A basement or lack thereof
What if the appraisal is higher than the selling price?
This is great news! This means the home or property value is greater than the price you will pay for it. It’s similar to finding your favorite brand on sale at the store. You get all the quality at a lower price.
Banks and lenders love it too. Lending out a large sum is a big risk for them. A high appraisal with a lower price tag means the home is a lower risk for them. In this scenario, your lender will be FAR more likely to approve your loan or mortgage application.
What if an appraisal is lower than the selling price?
This means you are paying more than the home is worth. You can try to renegotiate the selling price with the current owner to bring it closer to the fair market value.
This also complicates financing your home purchase. Your loan or mortgage application could be rejected, or you may be expected to pay the difference.
Buying a newly constructed home is an advantage because the home builder appraises the property and has a lender onsite approved to mortgage the home at the appraised price, easing the buying process.
How long does an appraisal take?
An appraisal can take up to a week. This includes both examining the home and the time it takes to fill and file an official report.
Is this appraisal value permanent?
No! Appraisals are subjective. If you buy a home in an upcoming or growing development and seek to sell your home later down the line, your home value may increase.
If you buy an offsite constructed concrete-built home that does not depreciate in quality over time you will have an advantage while reselling your home.
How to appraise your future home as a buyer
Here is what you will want to know before you buy a home.
1. Research the current market for similar homes.
Local real estate appraisal records will show the price of similar homes in the area. This can be a great asset before you offer a price or counteroffer. You can find local records with your local government’s property/real estate division, sites like opendoor.com, and local public records. You can also contact a local real estate appraiser to find out where local public records are filed.
2. Examine your desired home.
Check out the plumbing, the electrical systems, and any wear and tear like loose floors and leaky ceilings. This will help you anticipate final costs in both the purchase and future repairs. Also look for health hazards like lead paint, exposed insulation, and mold. A new home has a distinct advantage here because it is built adhering to the latest building codes and has better quality.
3. Make sure there is a contingency clause.
Some home offers require a Goodwill Payment. If you withdraw your offer, you could lose this money in the process. Make sure you know at what points you would get that money back before agreeing to pay. For example, if the home’s appraisal price is not as high as expected, a contingency can let you withdraw without the penalty.
Looking to buy a new home
We ALWAYS sell our offsite constructed homes within their appraisal price. Our onsite mortgage advisor will ensure that you have a seamless home buying experience.
Get all the quality and value with our new home developments. Visit our sales office today. Book an appointment.