DON'T do this if you are under contract on a new home!!! If you do, you may not get the keys!" Photo by Justin Sullivan/Getty ImagesThe loan is approved, the contract is signed, the
What Home Buyers And Sellers Should Know About Appraisals JOE COOPER CLERMONT FLORIDA REALTOR ®
Provided by: Joseph Cooper, P.A. Team Cooper Homes
Preferred Real Estate Brokers
352-874-5764 or 352-874-6449
When it comes to real estate, the appraisal is a big deal. Everyone is standing by, waiting until the appraiser looks over the property and comes back with a figure for what he thinks the place is worth. Whether the property is a $250-thousand single-family house in Clermont or a $2.5-million estate in Windermere, nothing happens until the appraisal report is signed and his opinion of the property's value is given.
An appraisal is not a home inspection. The two are totally different. The inspector's job is to make sure all the mechanical and subsystems are working and that there are no structural issues. The appraiser's job is to observe the house in its current state, compare that with similar homes in the area and come up with a valuation.
Here are some things you should know:
The appraiser's valuation is his or her opinion of what the property is worth. It has nothing to do with what the buyer is willing to pay or what the seller is willing to accept. An appraiser is hired to gather data, provide an EDUCATED interpretation of the data and an ESTIMATE of value in the market.
Now, Iâ€™m not saying anything bad about appraisers. In fact as far as real estate professions go, they are in one of the most highly trained, highly regulated groups.
Appraisers are licensed and are supposed to be familiar with the area in which the subject property is located. Licenses are hard to come by. It takes two years, 300-plus tested education hours and 3,000 field hours to obtain an appraiser certification.
They are bound by the Uniform Standards of Professional Appraisal Practice. Because of this, they are very careful when it comes to what they will and won't do when it comes to value, property condition and selecting comparables.
Appraising is a full-time profession. The typical appraiser does one or two appraisals a day.
That being said, two appraisers could do an appraisal on the same day, on the same house, come up with two different values and both be right. The value is really the appraiser's opinion, not an average, not a range, but a number the appraiser picks by looking at the data, understanding the market and all factors considered.
If the appraisal comes in too low for the lender to accept the buyer's application for a mortgage, the seller will have to lower the price or the buyer will have to come up with more cash to make the deal work.
The good news is - the appraiser's valuation does not have to be the final word. Most appraisal companies offer a procedure to follow if anyone involved in the deal thinks the valuation is off-base.
So, if you are selling your home, remember this - Appraisers are only as good as the data available to them.
Most markets have a multiple listing service which will give the appraiser accurate, reliable, useful information. If the market is moving, appraisals are usually spot-on. Issues arise when the appraisal is on new construction or houses in rural areas where there are few houses selling. Then, the appraiser has to deal with incomplete, inaccurate and outdated data.
So, sellers, write up an inventory of all the improvements you made to your house within the previous five years. Have receipts if possible. Present this to the appraiser as he enters the house. That way, the appraiser can spend time verifying the information, which is more likely to reflect favorably upon the overall appraisal.
Remember, though, you are only as good as your neighborhood. Like it or not, your neighbors and your neighborhood have an overall effect on your home's value. In a $250,000 neighborhood, spending $100,000 on improvements is not likely to add $100,000 in value.
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