When you go to sell your home the very first thing you think about is how much you could get from the sale. You can really price your home anywhere you want but if someone's getting a loan they're going to need to have an appraisal and if that appraisal comes in lower then you're asking price, the buyer will either need to make up the difference or you'll need to lower the price. Here are five things you need to know about the home appraisal process.
#1. Who are appraisers?
A home appraiser is probably one of the most educated people in the home buying and selling process. Real estate agents, loan officers as well as home appraisers will need continuing education every year. Home appraisers must stay up-to-date with laws, changes to the appraisal forms and make requirements for certain appraisals.
#2. Why home appraisal is important.
No financial institutions such as banks or credit unions will lend money for house without an appraisal. They want to verify that you and them are not overpaying for the house. The banks will need to know what the loan collateral will sell for if the borrower defaults on the loan. The bank doesn't want to be stuck with the home that it can't sell for as much is you owe on the house. It's in everyone's best interest that the appraisal is close enough to the price that both buyer and seller have agreed upon.
#3. Who pays for the appraisal?
The seller is typically the one that pays for the appraisal at closing. It's rounded into the closing costs. Most appraisals are between $300 and $450 on average. For refinancing, is obviously the homeowner's responsibility to pay for it because there's no one else involved.
#4. They differ from home inspections.
Sometimes the term "appraisal" and "home inspection" will get interchanged but they are two distinctly different things. They will both walk around the house and take pictures and make notes about the house but the inspector is looking for different reasons. The appraiser is looking for the value of the home while the inspector is looking for any damage, defects or problem areas that could cause financial stress in the future.
#5. How do appraisers determine price?
There are dozens if not hundreds of factors that go into determining price in an appraisal. The appraiser is looking for key characteristics to start off the appraisal such as square footage, how many bedrooms, how many bathrooms and general condition of the home. They will then look at similar properties that have sold within the last 3 to 6 months depending on how quickly homes sell. Of course there is always those custom homes that are unique and must be carefully appraised, especially when there are very few similar properties.
Homeowners, sellers and buyers can dispute to the appraisal and actually pay for another one. If there's some issue with the home or does not appraise for a certain amount, you can pay to have another one but it will be at your own expense and you still might not be able to get the value you're looking for.
For more information contact us today about getting started with an appraisal, listing your home or finding the perfect home in the Portland Metro area.