Tracy Johnson's Blog
Home appraisals are an important part of the buying and selling process. Lenders use appraisals to make sure that the home is worth what the borrower is paying. A home’s appraisal value is based on a number of factors, all of which we’ll discuss in this post.
Whether you’re a buyer, seller, or are just learning about the process of buying a home so you’ll be better equipped in the future, this article is for you.
How is a home appraisal different from an inspection?
While home appraisals and inspections are performed by licensed or certified professionals, they have to different functions. An inspection ensures the safety of a home, as well as whether or not it will need repairs in the immediate or near future.
Appraisals, on the other hand, aim to value a home based on its property value, the size of the property, and the location of the property. The condition of the home is a factor in valuing a home, which is why some people confused appraisals with inspections.
Who pays for appraisals?
Like most closing costs, a home appraisal is a burden that falls on the buyer. Typically, the lender you choose will work with will actually order the appraisal. The cost, which usually amounts to a few hundred dollars, can be added to your closing fees. You can find the cost for an appraisal listed on the Closing Disclosure document provided by your chosen lender.
Which factors determine the home’s value?
To appraise the house itself, appraisers will look at the condition of the home. They’ll also weigh the features of the home in their valuation--things like the number of bedrooms and bathrooms, for example.
However, the two key characteristics of a home that contribute to its value are its age and size.
Which external factors contribute to the home’s value?
As you might suspect, the location of your home matters greatly when it comes to appraisals. Homes are appraised based off of average prices for their neighborhood and region.
Other location factors include how accessible the home is, if it’s located on a waterfront, and whether it has desirable views.
When does a home get appraised?
While your experience may vary based on your specific circumstances, most appraisals occur after a buyer has signed a purchase contract. One this is done, the lender will take the steps necessary to order and process the appraisal.
How long is the home appraisal process?
Once the buyer has signed a purchase contract, the appraisal is usually completed and processed within 7 days. The appraisal report will be sent to the lender. This report contains the appraised value of the home. Buyers are entitled to a copy of this report, and should keep one for their own records.
Requesting a home showing usually is a great idea if you find a residence you may want to buy. In addition, there are many things you can do to get the most out of any house showing, at any time.
Now, let's take a look at three tips to help you attend a home showing and determine if a particular residence is right for you.
1. Analyze All Areas of a Home
A home showing enables you to get an up-close look at all areas of a residence. Thus, you should examine each room in a house during a showing so you can envision what life may be like if you acquire this residence.
Don't forget to walk around outside a house, too. By doing so, you can evaluate a home's yard and other outdoor amenities, as well as the condition of a house's roof and siding.
2. Don't Hurry
There is no need to feel rushed during a house showing. Instead, take as much time as you need to walk around a house and perform a full property evaluation.
If you find you still want to know more about a home after a showing, don't stress, either. You can always request a second home showing to further evaluate a residence at your convenience.
3. Ask Questions
A home showing provides an unprecedented learning opportunity. As such, you may want to ask questions as you walk around a house so you can receive instant home insights from a seller's agent.
Furthermore, it is crucial to remember that there is no such thing as a "bad" question. If you are unsure about whether a house suits you perfectly, ask questions about the residence. That way, you can gain the insights you need to make an informed decision about whether to submit an offer to purchase a home or continue your house search.
As you get set to embark on the homebuying journey, you may want to collaborate with a real estate agent as well. This housing market professional can help you prepare for a house showing, along with provide insights into the homebuying journey that you may struggle to obtain elsewhere.
If you view a house with a real estate agent, for example, you can follow up with this housing market professional after the showing. Next, a real estate agent can help you weigh the pros and cons of a residence. And if you decide you have found your dream home, a real estate agent can help you put together a competitive offer to purchase this residence.
For homebuyers who are on the fence about whether to request a house showing, you may want to consult with a real estate agent right away. With a real estate agent at your side, you can get the support you need to streamline the homebuying journey. As a result, you can work with a real estate agent to find and acquire your dream residence without delay.
If you intend to buy a house, you may want to employ a home inspector. In fact, there are many reasons why a buyer may hire a house inspector, such as:
1. You want to identify any underlying home problems.
Although you may have walked through a house a few times before you submitted an offer to purchase, a house inspection allows you to receive comprehensive insights into a residence. Once you have a home inspection report in hand, you can assess any underlying house problems and plan accordingly.
A home inspection is conducted by a property expert who will analyze all areas of a house. Plus, you can attend an inspection and walk through a house with an inspector to obtain firsthand insights into a residence's condition. As a result, you can use an inspection to identify any underlying house problems before you finalize a home purchase.
2. You want to determine if you should follow through with your original offer to purchase.
A home inspection may reveal both minor and major issues with a house. Meanwhile, as a buyer, you will need to determine if you want to continue with your home purchase after an inspection. On the other hand, you may want to modify your initial offer to purchase or rescind your homebuying proposal following an inspection.
Ultimately, a home inspection provides insights into a home that you otherwise may have struggled to obtain on your own. You also can ask a home inspector to address any concerns or questions about a house following an inspection. And when you have a home inspection report in hand, you can review the results of this report to determine if a house is right for you.
3. You want to make the best-possible homebuying decision.
A home purchase likely is one of the biggest transactions you will complete in your lifetime. Thus, there is no need to cut corners as you try to accelerate the homebuying journey. Because if you forgo a home inspection, you could suffer the consequences of this decision in the near future.
When it comes to purchasing a home, it helps to gain as much information about a residence as you can. Thanks to a home inspection, you can use a wide array of information to analyze a house. With this information at your disposal, you can make the best-possible homebuying decision based on your individual needs.
As you navigate the homebuying journey, you may want to employ a real estate agent, too. In addition to helping you find your dream residence, a real estate agent will guide you through the home inspection process. He or she first will help you find a qualified inspector to analyze a house you want to buy. Furthermore, a real estate agent will attend a home inspection with you and help you assess the results of a house inspection report.
Ready to complete a successful home purchase? Conduct an inspection prior to completing a home purchase, and you can obtain the insights you need to make an informed homebuying decision.
Ready to submit an offer on a house? Not so fast. First, you'll want to consider a few key questions, including:
1. Can I afford to buy a house?
If you find a house you like, make sure you can afford the monthly mortgage payments. By doing so, you may be able to avoid costly, time-consuming problems down the line.
Ultimately, getting pre-approved for a mortgage can make a world of difference, particularly for a homebuyer who is ready to submit an offer on a home.
With pre-approval for a mortgage, a homebuyer will understand exactly how much money is at his or her disposal. As a result, this homebuyer can avoid the temptation to overspend on a house.
2. Should I submit a "lowball" offer?
For many homebuyers, it may seem like a good idea to submit a "lowball" offer on a house. But doing so may be problematic for a number of reasons.
If you submit a lowball proposal, a home seller is unlikely to take your bid seriously. As such, this home seller may dismiss your offer and move on to other proposals quickly.
In addition, a lowball offer may cause you to miss out on the opportunity to acquire your dream residence.
When you locate the perfect residence, there is no need to leave anything to chance. If you submit a fair proposal that meets or exceeds a home seller's expectations, you can avoid the risk of losing your dream house to a rival homebuyer.
3. How much should I offer for a residence?
We've already established that a lowball offer is rarely, if ever, a good idea. Now, you'll just need to determine what differentiates a fair proposal from a lowball one.
A fair proposal accounts for the needs of both a homebuyer and home seller. It should be based on the current state of the housing market as well as the condition of a home.
For instance, if you're operating in a buyer's market, there is likely to be a broad assortment of homes available. This means a home seller may need to lower his or her expectations due to the sheer volume of quality residences currently on the market.
Don't forget to study the prices of recently sold homes in a particular city or town too. This housing market data will help you better understand how a residence you're considering stacks up against comparable houses so you can submit an appropriate offer.
4. Do I need a real estate agent?
A real estate agent will take the guesswork out of buying a home, and for good reason. This real estate professional can help you prepare an offer and will negotiate with a home seller on your behalf. That way, you can streamline the process of going from homebuyer to homeowner.
Hire a real estate agent before you submit an offer on a house – you'll be glad you did. A real estate agent will guide you along the homebuying journey and ensure you can secure a great house at a price that fits your budget.
Once you decide you’re in the market for a new home, one of the first decisions you’ll make is whether you should hire a real estate agent to shop for a house or go out your own. While buying a new home without a professional representative is possible, there is no disadvantage to working with one, here’s why.
It Doesn’t Cost You Anything
Generally, the seller pays the commission fees to any agents representing both sides of the sale. From a buyer’s perspective, they really have nothing to lose by working with an agent since they won’t have to pay any out-of-pocket costs.
Additionally, REALTORS® are members of the National Association of REALTORS® (NAR), which means they are bound to adhere to a specific code of ethics. This means you’ll have a representative who has pledged to abide by this code and approach every transaction honestly.
Bring Expertise to the House-Hunting Process
As a buyer, unless you’re fully versed in the finer points associated with real estate purchases, along with a certain level of legal expertise in contractual law, you’re better protected if you work with a professional agent. Agents are well-versed in the most up-to-date information associated with the housing market. Skills trained agents bring to the house-hunting process include:
Essentially, working with an experienced and licensed professional means you’ll have someone on your side who can do the bulk of the leg work while helping you find the house of your dreams.
Strong Knowledge in the Bidding Process
Investing in a major purchase, such as a home, usually comes with some stresses, along with a few bumps along the road. Once you reach the negotiation and bidding stage, your agent can ensure these go as smoothly as possible. They bring many valuable attributes to the table when it comes to sealing a deal.
Buying or selling a home can be an emotional process. An agent can make sure negotiations are conducted with a levelheaded approach to make certain a fair deal is made.
In addition to the above reasons, it’s important to remember, your real estate agent is always on your side. They can provide you with both guidance and objectivity as you seek to find your new home.