The Dennis
Bailey Team
|
The Dennis
Bailey Team
|
|
| Appraisal
Facts and Fiction I am not a licensed appraiser, but I do have a good understanding of what impact the appraisal process has on the purchase of a home. Also, there are many misconceptions concerning the appraisal process. Hopefully the following facts and fiction items concerning appraisals will help clear up most of the misconceptions. Fiction: If an appraiser values a home at an amount lower than the purchase price, the buyer can't buy the home. Fact: If an appraiser values a home at a lower amount than the sales price, there are several options. First, the seller can lower the price to the appraised value and the problem is solved...but the seller is rarely happy about it. Second, the Buyer can pay the additional amount "out-of-pocket" and again the problem is solved...however that's even worse, because the buyer "knows" they are paying too much for the property. Finally, it is possible to get an appraiser to reconsider if there are comparable properties that weren't considered in the appraisal...but that's the exception, rather than the rule. Fiction: Price per square foot is the formula that appraisers use. Nothing else matters. Fact: Appraisers consider location, lot size, condition, deferred maintenance (if any) and comparable sales in the local area to determine value. However, an appraisal is an opinion, and rarely do two appraisers come up with the same value for the same property. Fiction:: The primary purpose of an appraisal is to keep the buyer from paying too much for a house.. Fact: The appraiser is performing a function for the lender, not the buyer. Their job is to prove that the house is worth the risk that the lender is taking...in other words, make sure they aren't lending more money than the house is worth. Fiction: Having your home spic-and-span clean when the appraiser arrives will effect the appraisal. Fact: Appraisers could care less if the is dust and dust present in the home. However, if the house hasn't been property maintained, it will effect the value. Cracked walls, peeling paint, cracked windows, worn carpet, and extremely faded/worn paint is considered deferred maintenance, and the appraiser's estimate of cost to repair these items will be taken right off the top of the home's value. Fiction: The appraisal of a home down the street two years ago means that your home is worth more. Fact: In most states, appraisers can only use comparable sales that closed within the last 6 months, but can stretch back as far as a year if there are no comparables within 6 months. However, the farther back the appraiser has to stretch, the less accurate the appraisal is. The same is true for comparable size (usually within 200 sq ft), age, and neighborhood (usually the same neighborhood, but can stretch out to adjoining neighborhoods). Fiction: Appraisers have no ethical requirement to reveal home defects to buyers. Fact: If the mortgage for the home is an FHA mortgage, the appraiser must perform an inspection (of sorts) concerning the condition of the home and that inspection is disclosed to the buyer. In many cases, those items disclosed become a contingency on the appraisal, meaning that the loan can't be issued without those items being completed. Fiction: An appraisal is the same as a home inspection. Fact: Regardless of how in-depth an appraiser inspects a home, it is always best to hire a licensed home inspector so you KNOW that the inspection is being conducted with your best interests in mind. It is absolutely the best insurance you can buy for the price. |
| |||||||||||||||
color,
religion, sex, handicap, familial status, or national origin.”