Everything you need to know about how a home appraisal works, the timeline, and how to save an appraisal if it comes in too low.
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A home appraisal is required if a buyer is purchasing a home with a mortgage. So how does a home appraisal work? An appraiser is someone who goes out to the property that is going to be purchased and is going to give an opinion of the value of that property. And Appraisal is not a home inspection. It will only tell the lender how much the home is worth for the lender knows if they're willing to give out a loan with the property as collateral. A home inspection is different because it helps the buyer understand the condition of the property instead of the value.
So what does an appraiser look for in a home appraisal? An appraiser is going to look at the exterior of the property as well as the interior to make sure that the value is supported by market comparable properties. The appraiser is also going to look at improvements that have been made in the home to see if there has been an increase in value since the last time I was purchased. An appraiser normally is going to use what's called a sales comparison approach to find the value of the property. The sales comparison approach to find the value of a home appraisal is where an appraiser looks at forty five different comparable properties within around a mile radius to see what the market normally has been paying for similar homes.
Do appraisers know the selling price? Yes, the appraiser usually will get a copy of the contract and will be able to see the selling price of long with any credits given to the buyer. The appraiser uses this as another datapoint to help them determine the value of the property. So, having a contract or a selling price is helpful for the freezer to understand what buyers are willing to pay for the property.
What happens if the appraisal comes in low? If an appraisal comes in low then buyers and sellers can challenge the appraisal through a reconsideration of value, or the buyers can renegotiate the price, or the buyer can come to the table with more money at closing .
An appraiser is first going to have the buyer pay for the inspection of the home, normally this is around $500. After that, the appraiser is going to contact the listing agent or the seller and schedule a time to inspect the property. After the appraiser inspect the property, the appraiser will send the full appraisal report to the lender and the buyer so they can see the condition of the home along with the value and all the supporting information as well.
A home appraisal is not too complex. It is mainly a multiple page document that helps lenders and buyers understand the value of the home with market support. This helps buyers not overpay and helps lenders not lend too much money. This helps both buyers and lenders be in a better position to sell if they need to future.
Hey, my name is Kyle and I'm a Loan Advisor serving Tennessee, Florida, and Ohio. I help you get a crystal-clear home loan so you can win the house you love.
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