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Everything you need to know about a home appraisal in Cambridge and surrounding area.
October 26, 2021 | Posted by: Michael Croitoru
| A home appraisal is an unbiased professional opinion of the value of a property. A licensed appraiser writes a professional opinion and report based on a visual inspection, but they will also use recent sales of comparable properties and current market trends. Aspects of the property like square footage, floor plan, location, features, and amenities will also be used to determine the property’s value. In the case of a purchase or refinance, this is completed to ensure that the lender is not shelling out more cash than the home is worth. A seller may decide to appraise in order to come up with a list price. WHO HANDLES THE HOME APPRAISAL The borrower will usually pay the appraisal fee, and the lender or mortgage agent will order the appraiser. This person or company will need to be on the lenders 'approved appraisers' list. The cost is in the ballpark of several hundred dollars. Please keep in mind that if the appraisal comes in lower than expected, the transaction can be delayed or even cancelled. The borrower will also need to come up with the difference between their purchase of sale offer amount and the appraised value. HOW IS THE APPRAISAL COMPLETED The appraisal will be completed using a visual inspection of the interior and exterior of the property with a standard form. He/she will include a street map showing the appraised property and comparable property sales used, an exterior building sketch, and an explanation of how the square footage was calculated. Any conditions that negatively affect the property's value, such as needed repairs, will be also be noted. You can also expect them to use other important information, such as market sales data, public land, and tax records. APPRAISING TO REFINANCE When you are appraising for the reason of a refinance on your existing home and mortgage, you will need to make sure that your appraisal comes out to your approved mortgage amount, otherwise, the transaction may be cancelled. Again, the lender wants to ensure that they are not lending out more funds than the home is worth. WHAT TO DO IF A HOME APPRAISAL FALLS SHORT If an appraisal falls short of what you are expecting, there are ways to manage this, as I have personally lifted a few appraisals from the ashes. While appraisals help buyers avoid overpaying for homes, they can also stand in the way of your purchase, sale, or refinance. If this happens, look into getting a second opinion from another company. Appraisers can still make mistakes, have imperfect information, or be new to the industry. It may be in your best interest, with the help of your mortgage agent or realtor, to present a good case for a higher value. Do your own research, list qualities or upgrades that the appraiser may have missed, and find your own comparable properties in the area. They may agree with you and revise the evaluation. THE BOTTOM LINE Now that you know the details of an appraisal, it's easy to see why the appraiser must be neutral and have no direct or indirect interest in the property. When everything goes according to plan the home appraisal is just another mortgage closing box to check. But, when the appraisal value is lower than expected, the transaction can go awry, quick! Regardless of which situation you encounter, a basic understanding of how the appraisal process works is definitely in your best interest, especially if you're a first-time homebuyer. |
