Are you paying more than you should for your home?
At Beverly-Hanks Mortgage Services, we understand that buying a home is one of the biggest and most important decisions you will make in your lifetime. And our goal is to make sure you never have to ask yourself: How do I know that I’m not overpaying?
One of the best tools to offer this peace of mind is a home appraisal. Today, we’re going to examine the most important things to know about home appraisals, including:
- What is an appraisal?
- When should you get an appraisal?
- How long do appraisals take?
- When do appraisals spell trouble for your negotiations?
- How do you find a qualified home appraiser?
Let’s get started!
What is an Appraisal?
A home appraisal is an unbiased professional opinion of a property’s current market value. In a home purchase, the appraisal is used to determine whether the home’s contract price is appropriate given the home’s location, permanent physical features and amenities, and current condition.
Licensed appraisers do a complete visual inspection of the interior and exterior of the home and note any conditions that adversely affect the property’s value, such as needed repairs. The appraisal report includes street maps and photos of the home and comparable properties (“comps”), as well as details about square footage, market sales data, public land records, and public tax records used to determine the property’s fair market value.
When Should You Get an Appraisal?
A seller could order an appraisal before putting their home on the market to assess any repairs needed and help set the initial listing price. More often, buyers order an appraisal during the due diligence period. At this time, an appraisal will assure their home loan lender that the money they are requesting is appropriate to the value of the home.
Ideally for buyers, a home appraisal would come back higher than the price offered and accepted by the seller. That means the property is “worth” more than the buyer offered, and thus the buyer is getting a “deal” for the home.
How Long Do They Take?
Generally, home buyers will request an appraisal within the first week after making an offer on a home and completing a home inspection. A home appraisal typically takes 2–7 days to fully complete, from scheduling the service to receiving the report.
When Do Appraisals Spell Trouble for Your Negotiations?
Believe it or not, home appraisals are one of the top reasons why contracts fall apart. Right now, homes are appreciating more quickly than the historical norm. Since market conditions are changing so rapidly, the “comps” on which appraisals are based, even those just a few months old, may no longer be relevant in the current market. And we’re seeing increased competition for homes under $600,000. That combination means appraisals are falling behind real-time home values and have become a major concern for contract delays and terminations.
If a home appraises at less than the contracted offer, buyers are generally responsible for paying the difference. (Often, a home loan will not cover more than the appraised value of the property.) In cases where the buyer does not have the additional cash on hand, transactions could fall apart.
How Do You Find a Qualified Home Appraiser?
Even in today’s fast-paced real estate market, Fannie Mae says that appraisals come in low less than 8% of the time. And many of these low appraisals are renegotiated higher after an appeal. But how can you ensure that your initial home appraisal is as accurate as possible?
The Appraisal Institute, an association of professional real estate appraisers, has defined what constitutes a qualified home appraiser. Qualified professional home appraisers should be licensed or state certified and be familiar with the local area. Federal regulations also require that the appraiser be impartial and have no direct or indirect interest in the transaction.
It’s easy to do a quick internet search for local home appraisers in Western North Carolina. But why worry whether you’re contracting the best appraiser in town when you can be sure? Ask your Beverly-Hanks agent or Beverly-Hanks Mortgage Services loan officer for their recommendation today!
Do You Have Additional Questions about Home Appraisals?
A thorough appraisal will help determine how much the home you are looking at is worth. This in turn will help you make an informed offer. If there are other things you would like to know about home appraisals and what they say about a particular property, we can help.