In home sale, home appraisal is one of the steps that the sellers should not skip. It is a stage at which the sellers evaluate the home to determine how much a home is priced at.
Home appraisal is usually conducted in a purchase-and-sale transaction to determine the home’s contract price based on the home’s condition, location and features. The appraisal convinces the lenders that the borrower will not apply for the loan more than the home is worth. This is to avoid the over-borrowing over the mortgage.
Today, we will learn more about home appraisal, how it works and how much it costs.
Home Appraisal Process
Home appraisal is usually conducted formally by a professional real estate appraiser that has already been licensed. It is also conducted primarily to protects the lender’s interest. Home appraisal is usually influenced by some factors like home amenities, visual inspection and the recent sales of the same properties done by the market trends.
Home amenities include the number of bedrooms and bathrooms, the square footage and the floor’s plan functionalities. Meanwhile, the complete visual inspection includes the interior and exterior as well as any conditions that contribute to how determine the home value.
Home Appraisal for Sellers
For home sellers, the lower appraisal their home has, the lower their home’s price will be. In the other world, the low home appraisal makes the home price low. This works only when the potential buyers purchase the home through loan or mortgage. If the home buyers buy home in cash, they are not required for home appraisal.
Your home appraisal is also influenced by the recent distressed sales that your neighborhood experience in selling home. If your home’s value has been drawn by the short sales nearby, you can convince the appraiser that your home’s value can be higher that your neighbor’s. However, make sure that your home as a better condition than your neighbor’s.
Home Appraisal for Homebuyers
Home appraisal is a must and placed in the first priority when someone wants to buy a home under a contract. Home appraisal is usually processed before the closing process. If a home appraisal is carried out in the contract price, the transaction can be processed based on the plan.
However, if the appraisal is carried out below the contract price, the transaction wouldn’t be made. In the other words, the transaction can be delayed or cancelled.
What If A Home Appraisal Is Bad
Home appraisal can go wrong either for the home sellers pr buyers. On one side, a home appraisal can help the buyers to avoid overpaying, on the other side, a low appraisal doesn’t mean a good ting for the sellers.
It is quite possible that a home appraisal is bias. That is because there will always be second opinions about the home purchase expressed by another appraiser. This way, an appraiser can also obtain the wrong information. That’s why, a home appraisal can go wrong.
Home Appraisal Report
A professional home appraisal will make a report as a result of his inspection over the house. In this case, most appraisers use the term provided by Uniform Residential Appraisal Report adopted from Fannie Mae. This term is usually suitable for home appraisal of single-family homes.
The report contains the clear description of the home’s interior and exterior of the target home and neighborhood. The report also states the information about the home price of comparables sales in neighborhood.
In the final part, the report provides an analysis or conclusions about the home value based on the appraiser’s observation.
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In detail, a home appraisal report will include the information below:
- A street map that shows the home location and comparable sales.
- The square footage that has been calculated.
- An exterior building sketches.
- The home images, specifically the home’s front and back as well as the street.
- Other crucial information about the home including the public land records, market sales data and public tax records. These will be used to decide the fair market value of the properties.
Home Appraisal Costs
A home appraisal will charge the seller to pay several hundred dollars. However, the actual fee depends much on the home size and condition. Based on the Appraisal Institute, there is an association of professional real estate appraisers.
The appraisers in this association are licensed. They have certificate as professional appraisers. The cost you shall pay for a home appraisal done by the professional appraiser is usually the standard.
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In conclusion, a home appraisal is a part of home selling-and-buying process. A home appraisal must be conducted before a home is finally sold on transaction. Home appraisal helps determine the price of the target home.
This way, you can hire a professional appraiser for your home appraisal. However, you can also find some online home value to make the home price estimation on your own