Whether you are choosing to sell or refinance your home, a real estate appraisal is a necessary part of the process. The results of the appraisal can affect how much the broker is willing to loan you, your original asking price and the final sales price. Needless to say it can be both an exciting and nerve wracking situation. To help guide you through the process we have compiled a list of key things you should know about home appraisals.
Your home isn’t the only one on the appraiser’s list
To get a better understanding of your home’s market value, the appraiser will evaluate other, comparable homes. These homes are usually in your area and have similar characteristics like house and lot size, add-ons and condition of repair. The appraiser may also look for comparable homes outside of your area. Again these homes will have similar features, and will reside in similar neighbourhoods.
The buyer pays for the appraisal
If you are looking to refinance your home, the bank will likely send an appraiser to determine its market value before they agree to the amount and terms of the loan. But, just because you didn’t ask for the appraisal, doesn’t mean you don’t have to pay for it. Even though the appraisal is for the benefit of the lender, and the lender orders it, you have to cover the bill.
You can order your own appraisal
On the flip-side, you can commission your own appraisal. The reason you might want to do this is so that you have full access to your home’s evaluation and what may affect it, like repairs and upgrades that need to be done to raise its market value. It’s important to note, that in the case where the lender is the client – i.e. requests the appraisal – only they can see the evaluation report. Even though you paid for it. So ordering your own can help you prepare.
There are different types of home appraisals
Appraisals requiring both an exterior and interior inspection of your home and property are commonplace, but there are other, less invasive appraisals. These are called drive-bys. While these appraisals are less thorough, they still do provide valid information for your market evaluation. The reason a lender might opt for a drive-by is because they do not question the value of your home, and so have likely already determined to support the loan amount requested.
How long are appraisal good for and how much do the cost?
An appraisal can be good for up to a year after completion date. However, in today’s fluctuating and challenging market, it is entirely possible that the lender might cut the effective date off at six months. If this is the case, the appraisal can be paid through a re-certification of value so that you don’t have to pay twice for a new report. This is good news considering an appraisal can run you upwards to $500.