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What Homeowners Should Know About Appraisals

What Homeowners Should Know About Appraisals

McClain 3 Whether you are buying or selling a home, you will encounter the words home appraisal at some point in your homebuying journey. For most homebuyers, a home appraisal can be scary as it can dictate whether the bank will approve or disprove their loan applications. However, knowing how home appraisals work as well as what to expect from this process can be extremely helpful. In this article, we’ve broken down what every homeowner should know about appraisals.   What is a home appraisal? A home appraisal refers to the process by which a licensed appraiser provides his or her opinion of a home’s value through conducting a thorough inspection of the property. The appraiser’s opinion will be combined with research to help them further analyze the value of the property. Some of the research in this process can involve data from recent sales of comparable homes in the same area or neighborhood as well as the current market conditions. Overall, these will allow the licensed appraiser to form his opinion which will then help the bank or lender verify if the loan the homeowner is applying for should be approved or not. This is because the opinion of an expert is required in order for the bank or lender to fully assess the risk of approving the loan.   Why do I need a home appraisal? As mentioned above, lenders will require a home appraisal as it will help them gauge the risks and verify the loan you are applying for. This is because lenders approve loans based on the appraised value of the property and not its listing price. Therefore, it is a means for lenders to verify if the amount of loan you’re applying for does not exceed the appraised value of the home and that they would not be over-lending. On the other hand, if you are selling a home, the home will serve as collateral for the loan and can help reassure lenders that in case you default on the payments, they will still get their end of the transaction.   How much do home appraisals cost? Typically, home appraisals will cost you around $300 to $400. However, the cost of the appraisal will depend on the area of the property as well as the size of the property. This means that if you’re living or looking at properties that are huge complexes and are located in metropolitan areas, then you should expect it to cost you more.   How do home appraisals work? A home appraisal usually starts when the licensed appraiser contacts the homeowner to schedule his visit after being requested by the lender to do so. On the date of the inspections, the appraiser shall then conduct a thorough inspection of the property. Once the inspection is done, the licensed appraiser shall then conduct research to gather more information on the property and its external environment. This research will include an analysis of the comparable homes in the neighborhood or recent sales in the neighborhood. Other external factors that can affect the final appraised value of a home can also be the market conditions. For example, if the property is a newer home in a great up-and-coming neighborhood, then the appraiser might increase the appraised value of the home.   What do appraisers look for? During the inspection, the appraiser will check and consider each and every factor that could play a role in determining the overall value of the property. This means that the appraiser takes into consideration the condition of the necessities such as the heating and cooling systems of the home. Another factor that plays into the overall appraisal value of a home is the upgrades done to a home. Upgrades such as a fully functional patio, a well-maintained porch, or even the appliances in a home. This means that you should focus less on the design and decorations of your home and focus more on the integrity of the home.   How do I prepare my home for home appraisals? Every homeowner’s goal is to get great value from a home appraisal. Therefore, it is crucial to prepare one’s home before the inspection. Here are some of the ways you can prepare:   Curb appeal Before you start focusing on the interior of the home, you must first focus on making a great first impression. The reality is, the first impression of the appraiser will not be formed once he steps into your home but rather, it happens once he parks his car outside of your home. This means that you need to clean up your home’s exterior. Whether it’d be mowing your lawn, touching up the paint job, or even cleaning your walkway. You have to remember that often, a home’s exterior is a great indicator of a home’s interior.

Deep Cleaning

The importance of cleaning your home cannot be stressed enough when preparing a property for an inspection. This is because although an appraiser will focus more on the integrity of a home, this can still be subjective. Furthermore, a dirty home can also make the impression that your home is not well-maintained and that there is a huge possibility of a pests infestation. Look for Small Fixes The reality is, as much as you would want to upgrade anything and everything that you can in your home before the inspection, it will always be a gamble. If you invest in remodeling and upgrades and you end up failing to get the value you were expecting, you have already incurred losses. Rather than focusing on these major upgrades, you can choose to focus your efforts on small and quick fixes. These can be a fresh paint job, sealing small carks or holes, or even replacing broken doorknobs and broken windows. All these small fixes can make a difference in the overall appraised value of your home without having to spend a huge amount of cash.