Whether you are refinancing, selling, or buying a home, a home appraisal is required by the lending institution.
The reason is simple.
The home appraisal determines how much money the bank is willing to lend you. Performed by a third party, a home appraisal gives the lender an estimated market value of the property as well as the condition of the home.
If the appraisal is less than the amount you’re financing, that becomes a red flag, a risk, for the buyer and the lender.
The reason is simple.
The home appraisal determines how much money the bank is willing to lend you. Performed by a third party, a home appraisal gives the lender an estimated market value of the property as well as the condition of the home.
If the appraisal is less than the amount you’re financing, that becomes a red flag, a risk, for the buyer and the lender.
Home Appraisals for Selling and Buying
The cost of an appraisal varies, depending on the complexity, the location, even the property itself.
Paid for by the buyer unless otherwise stated in the contract, appraisals can be a make-or-break point in the mortgage process.
If the appraised value matches the agreed upon contract price, the bank is satisfied, and the mortgage process is straightforward.
However, if the appraisal comes back as lower than the contract price, further negotiations are warranted.
From a seller’s perspective, there could be recent foreclosures in the neighborhood or other market events that unfairly affect the value of the property.
Regardless, the buyer may want to re-evaluate the terms of the current contract or simply walk away from the contract.
Home Appraisals for Refinancing
If you’re refinancing your home, an appraisal is usually required by the lender. As with buying or selling a home, if the appraisal comes back lower than the proposed refinance, your application can be denied.
You can also request a reconsideration if the appraised value is lower than anticipated.
For FHA or VA loans, it is possible to refinance without an appraisal.
Here’s What Home Appraisers Look For
There are many factors that can affect home value. Some of the items appraisers review are as follows:
- Location of the home
- Overall condition of the home/property
- Plumbing and electrical systems
- Size of the home
- Updates to the home
- Safety features of the home
- Materials the home is made of
- Damages to the home
- Nearby sales
- Outdoor and indoor amenities
The appraisal must be comprehensive to determine the home’s estimated value. While very involved, it’s another step in the homebuying process that protects both the buyer and the seller.
Boosting Your Home’s Appraisal Value
If you’re preparing to put your home on the market, you can ensure a good appraisal with these cost-effective measures:
- Remodel water-stained walls
- Clean up your house including plastering cracks
- Get rid of persistent odors and pests
- Clean dirty carpets
- Fix broken garage doors and refresh overgrown landscaping
- Make sure the exterior looks attractive
- Revamp tiling
- Clean or install new windows
Any repairs costing over $500 should be taken care of such as defective roofs, cracked windows, and leaky faucets.
Make a list of any repairs you made to the house in the last few years and have the receipts for those repairs.
Try to make your house look as new as possible!
When you’re ready to close on your new home, turn to Lilly Title & Settlement. We’re obsessed with the settlement legal details so we can get you into your home quicker!
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