You’ve found your dream home, but how do you really know that it’s worth what the sellers are asking? A real estate appraisal can give you that answer. This comes from an expert that is certified and state-licensed. The appraisal will help keep you from over-paying and protects the bank from getting stuck with a property that’s worth less than they paid for it. It is an unbiased professional opinion of the home’s value.
Once you apply for a mortgage, the lender will typically require that your house be appraised by one of their approved appraisers. You are required to pay for the appraisal and it typically costs around $400.
The appraisal will be one of the first steps in your closing process. There are two methods to appraise a residential property. The first is a sales comparison approach. The appraiser will compare the property with a few other similar homes in the area. These are often called comps. They will look at the lot size, square footage of the home, style, age and other features of the home. The second method is called the cost approach. This is used more for new property. The appraiser estimates what it would cost to replace the structure if it was destroyed.
Generally, these are the things that are included in a home appraisers report. An explanation of how they determined the value of your property, and the size and condition of the house. It will also describe the improvements that have been made and what materials were used. The report will also let you know if there are any serious structural problems with the home. It will include information about the surrounding area and an evaluation of recent market trends that may affect the value of the home. Also included is a comparative market analysis, maps, photographs and sketches.
What if the appraisal came back low? The first thing you’ll want to investigate is why the appraisal came back so low. Are there repairs that the homeowner needs to correct? If so, once they are corrected, you can have the appraiser take a second look. If there are no issues with the appraisal, your agent will submit a form asking the seller to lower the purchase price of the home to the appraised amount. A lender will not give you more money than the property appraises for. In most cases, the seller will lower the price, but if not, you could choose to pay the difference or cancel the transaction.
If you are a seller looking to increase the appraisal of your home, there are a few things that you can do. Give your home a really good cleaning and fix any minor repairs. Keep your pets locked up while the appraiser is there so they do not annoy him or her. Always be honest and friendly with the appraiser and answer any questions they may have.
If you are refinancing your home in a conventional mortgage, a low appraisal can keep you from being able to refinance. Whatever you want to refinance for, the home needs to appraise at, or above that amount. If your existing mortgage is an FHA loan, you are still in luck. You can refinance without an appraisal through the FHA Streamline Program. This is a great option if you are underwater in your loan.
If you are in need of Columbia, MO home appraisal information, feel free to contact us. We are here to help!