Choosing Your Home Value – The Appraisal Process
March 15, 2010 by GuestWriter
Filed under General, Pre-Market
The process of appraising your home involves developing a value from an opinion of an expert using a standard practice. When done accurately, it will help sell a property in an open market. It is important that we know how the valuation is derived.
In determining the important elements of the home appraisal, the following should be considered:
o Important actions to undertake to make the appraisal of the home better
o Things to be done when the appraisal does not go well
Clarifying Issues About Appraisal Of Homes
The process of home appraisal revolves around the opinion of professional appraisers on the market value of a home based on a survey done using a standard method of practice. The appraisal is usually done by a professional at the instance of a bank for a mortgage loan that is being approved for a home buyer.
The determination of the value of the home considers several aspects of the home which include the overall condition of the home and the neighborhood, the price trends especially of similar real estate properties, and how fast the homes of the same type or class are selling in the open market. In general, the home appraisal is a report that incorporates a professional opinion on the value of a home for sale based on the physical aspects of the property and the prevailing conditions in the market.
The appraisal is not all about home inspection! The report is a comprehensive study of factors that make a sale of a particular home.
Things To Do When Faced With A Low Appraisal
The lender normally chooses the appraiser who will do the appraisal of the value of the home. However, the lender may also consider an appraiser chosen by the seller if the appraiser is well known. Sellers may opt to get their own appraisal, which will cost them $300-$500. The lender, however, may not recognize the appraisal report done by the one selected by the seller and will still rely on the report made by their preferred appraiser.
A mortgage loan may be jeopardized by an appraisal of the home for sale if it comes out lower than the asking price. The mortgage loan, in general, is only equivalent to 80% of the home value appraisal. It would be good if the seller is willing to adjust his price to reflect the result of the appraisal report. In some instances, the buyer and seller negotiates for a middle ground where both will be comfortable to proceed with the deal.
In instances where the buyer is willing to cover the amount corresponding to the difference between the appraised home value and the seller’s asking price, the lenders may not see this as a favorable arrangement. Such terms of negotiation between the buyer and the seller is seen by lenders as a negative equity and will have a negative effect on the approval of the loan.
Another option that is open to you is to dispute the results in the appraisal report. You can check on the prices of similar homes sold in the last six months and compare the results of your own survey with that of the appraisal report done for the lender. It would help greatly if you have a comparative market analysis or CMA even before the appraisal is done, as you can use this to defend your case when confronted with a low appraisal of home value. In such instances, the lender will usually ask another appraisal to be done by another appraiser.
The home appraisal is an important aspect in getting a mortgage and is usually the most confusing aspect of the entire process. The appraisal report is the expert’s opinion on the actual value of a property in the open market. It is important that you fully understand the elements that go into the process of appraising a home.
Learn more about the Anchorage Real Estate market or search Anchorage Homes For Sale on Ryan Tollefsen’s Alaska Real Estate web site.
