6 Things to Understand About Home Appraisals


6 Things to Understand About Home Appraisals

Having the house appraised can be one of the most treacherous endeavors you go through during the home buying or refinancing process. However, here are a few things to consider when looking to find the value of your house that should lighten the burden of worrying about this.

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  1. Comparable Sales:

One of the most influential parts of the appraisal report that will decide value is the comparable sales of homes in a five mile radius of your home within the last year. There are plenty of online websites that can show values of comparable sales in your area. However, values found online can be skewed or misleading. The value of the home is ultimately found by the Appraiser.

  1. Ordering an Appraisal:

In most cases when working with a bank or lender, they will usually order the appraisal. The banks and lenders must use an approved Appraisal Management Company (AMC). This is for your protection against unethical practices. When banks and lenders use a third party AMC, it creates a more accurate appraisal value because the AMC’s will only use reliable and professional Appraisers. This ensures that you are receiving an accurate appraisal.

  1. Authenticity:

Once you receive an appraisal from a Bank or Lender, be sure to receive a color copy of this. The color copy will ensure its authenticity in case you need to use it elsewhere. Remember, an appraisal is usually only valid for about 6 months. More than likely, you paid for the appraisal upfront or out of pocket so be to sure to get a copy of it.

  1. Costs:

An appraisal’s cost can vary greatly depending on the type of property (single-family, multi-family, condo, etc.) It can also vary on loan type and the state that you live in as well. Different loan types will have different types of a required appraisal which causes a variance in cost. Do not be alarmed if you decide to change loan types and the cost of the appraisal is different, this is not the bank or lender trying to “pull a fast one”. For example, home appraisals in Alaska can be an upwards of almost $1k due to the cost of the bush pilot and fuel for the airplane that has to fly the appraiser to the remote dock to hop in a rental car to drive to the property.

  1. Clean the House:

This might sound like a “given” and Appraisers are not looking to see if you have done your laundry or not. However, do not give anyone a reason to miscalculate. Appraisers are human and a home appraisal is an Opinion of Value. Having the house appraised does not have to be a dreadful process. Be sure to have the house clean and make any small repairs that you feel that you should make. Even during a refinance, treat the appraisal as if you were staging it for a potential buyer.

  1. Realtors:

Using a local realtor is a great resource in trying to find the value of your property. Not only do they want your business but they will give you valuable information about your home value based on the information located in the MLS listings. Usually only Realtors have access to this database. The database has stored information on comparable sales within the last year. Just be sure to use a seasoned Realtor and ask for a Market Analysis. A Realtor might charge for one of these but it will be way less than an appraisal and will give you a good standing on your home value before you shell out some cash to pay for the appraisal.

As we all know it is better to prepare for the worst, but expect the best. It is hard to swallow the harsh reality if the value were to come in a little lower than expected. However, if this is the case, do not lose hope, for you do not lose any money invested in your home until you sell the house. The home values will go up and down, just hold onto it a little longer until the market shifts again.

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