So what exactly is an appraisal? And why do we need one?
-An appraisal is a valuation of the property you want to purchase. You need one because lenders generally require it if you are using the home as collateral for the loan. Lenders also want to ensure that the property is worth at least as much as it fits the lending guidelines.
Who does the appraisal?
-An independent third party carries out the appraisal. This person can have no financial stake in the outcome of the appraisal. The mortgage company usually hires an Appraisal Management Company (AMC), which in turn hires a local appraiser who is on their roster. The buyer pays for the appraisal as part of the home loan process.
What different things factor into a home appraisal?
-Appraisals are normally very detailed but most include : Details about the property; comparing the property to three other homes in the area; where the home is located, what type of area it is, and how that affects the value; any aspects of the home including what condition it is in; and an estimate of how long it would take to sell the home.
What are appraisers looking for specifically?
-Appraisers look at the property size (How big is the house? How big is the lot? Number of rooms?), interior (What materials were used in the inside of this property? What kind of fixtures are in the home?), improvements (Has there been any large changes to the home? Remodels?), exterior (What is it made of? What condition is it in?) and extras (Is there anything in the home that would add value-such as a fireplace, security system, air conditioning, pool, large deck, etc.).
How much time should it take?
-There are three main steps to an appraisal :
1. Physically visiting the home
2. Comparing the home to other properties in the area that have recently sold
3. Creating a report.
The physical visit lasts a few hours. It then takes about a week for the appraiser to complete the research and write up the report.
While home appraisals can be stressful and can sometimes cause a problem during the home buying process, they are relatively a simple step. Simple awareness can help the appraisal go smoothly and help the transaction happen in a timely matter.
