As a home buyer or seller, you’re likely to encounter a home appraisal as part of the real estate transaction. The process can be a deal maker or a deal breaker depending on the results of the appraiser. Then again, if you know what to brace for, the appraisal segment of the process can just come and go without any hitches.
Here are several important things you need to know about home appraisals as you go on your journey to home buying/selling success.
What is an appraisal?
A home appraisal is conducted to find out if a property should be approved for a mortgage loan. The appraiser assesses the home’s true value and compares it with its listing price. If there is a yawning discrepancy between the actual value and the listed value, then negotiations between buyer and seller resume with contingencies being the topic of discussion. Whether or not an agreement is made afterward will determine the fate of the mortgage approval and the sale as a whole.
How is a home appraised?
A licensed appraiser conducts a complete and meticulous inspection of a property. Some of the factors that could affect the property’s value are:
- Lot size, view, curb appeal, etc.
- House features, upgrades, or additions
- Neighborhood
- Interior condition (utilities, appliances, etc.)
For buyers:
Why it’s important to know about home appraisals
A mortgage lender will approve a loan based on the appraised value of a property, not its listing price. So, if you are buying a home via a mortgage, the home appraisal will ensure that you’re not paying too much for a property.
Note that the appraisal is usually paid by the buyer since it is their lender that requires it. The cost can either be rolled into the buyer’s closing costs or paid on the spot.
If results of the appraisal reveal that the home is worth its price tag, then the loan will likely move forward. But if results are lower, either you and the seller can renegotiate or you can back out of the deal.
For sellers:
How to make sure the listing price is right before appraisal
- Vet the competitionCheck the sales prices of homes similar to yours in your area. To see the similarity, check on square footage, layout, upgrades, and condition of other homes in relation to yours.
- Finish minor fixesCross out all those projects in your to-do list! Oil the hinges on that squeaky door, put an end to the running faucet, and revamp that picky garbage disposal.
- Crank up the curb appealThe exterior of your home has a huge impact in determining its overall value. Fix loose shingles, unclog gutters, ensure that pathways are clear and well-lit, and add decorative elements to your doorway.
- Give the appraiser spaceGuiding an appraiser or pointing out all your improvements can be tempting. However, we’d rather that you step back and let them do their job. Once the appraisal is finished, you can step back in to answer any questions they may have.
Do you need assistance in having your California property appraised? You can rely on me, your most-trusted Redondo Beach Realtor, to help you find dependable appraisers in the area. Call me, Marco de Longeville, at 213.675.0197 or send me a note here for more info.
