Appraisals Explained

Appraisals Explained

Appraisals are one of the most confusing aspects of buying or selling real estate for the consumer. Is the value of your home what you and the seller just agreed on? When a buyer and seller agree on a sales price, it can be frustrating to hear that the appraisal came in with a value too low. It’s not enough for the principals to agree to the price, the appraisal is the lender’s way to ensure they are not loaning money over the actual market value of the property.

What does the appraisal cost and who pays for it?
While your lender will typically arrange for an appraisal, the buyer is ultimately responsible for the cost. Don't let this cost stop you from making offers: The home appraisal will only occur after your offer has been accepted by the seller and you have begun to work with a lender to finance your new home. You do not need to complete appraisals on every house you choose to bid on. 

 The appraised value is reached by a licensed professional who looks at the real estate market in which the target property is located. In most residential property transactions you are able to choose your real estate agent and your lender, but you cannot choose your appraiser. Instead the appraiser must be chosen by your lender to provide a level of independence from the buyer and seller. 

 They start with the target property and then look for recent sales in the area of comparable properties. These comparable properties will be located within a short distance of the target home, normally within a 5 mile radius. They should also be of comparable size and often fall within the same housing development.

 Once these homes are identified, the appraiser will adjust for the specific differences. For instance, does the target home have an upgraded kitchen or swimming pool? They add or subtract value based on such things as location, view, lot size, upgrades, additions, condition and many other factors. They can then arrive at a valuation for the target home.

 Once the appraisal has been completed, the lender is notified of the value. At this point, the loan amount is either confirmed or declined. If the appraisal comes in too low, the principals can choose to make up the difference in sales price, lower the sales price or cancel the transaction.

 What is the difference between an Appraisal and a Home Inspection? Although the home appraisal may seem similar to the home inspection, the goals of these two processes are very different. 

• The Appraiser determines the value of the home
• The Inspector determines any repairs needed, and their potential cost.

 Appraisals are not as complicated as they appear. By learning about recent sales in your area ahead of time, you can price your home appropriately up front with me; then the appraisal should come back as expected. 

If you have further questions about appraisals or your homes value please email me or call. I'm happy to give free home evaluations. 

Your Home-Your Neighborhood- My Priority

How To Lower Closing Costs

How To Lower Closing Costs

Closing costs help facilitate the sale of a home and both buyers and sellers pitch in. Some closing costs can be paid before the home is officially sold and others are paid at the end. 

 However, closing costs aren’t set into stone and they can be negotiable. You can ask your real estate agent or lender with help in estimating your actual closing costs. Look over everything to make sure all the numbers are right and then you plan accordingly in how you’re going to lower them.  

Loyalty Programs
  Some banks offer assistance to buyers when they use them to help pay for the purchase. It’s a way for a bank to reward loyal customers. 

 Closing at the End of the Month
 Schedule your closing at the end of the month so you don’t have to pay the per diem interest for so many days.  Get Multiple Quotes Get estimates from different lenders because you’re looking for the best package of closing costs and interest rates. There might be something better out there.  

Junk Fees
There may be some fees a lender charges that may be negotiable, such as origination fee, processing fee, or application fee. Make sure to ask if what you are being quoted is the best they can offer.  

Title Costs 
Sometimes title insurance and settlement are bundled together. You may be able to find a title and settlement company that is less expensive. 

 Negotiate With the Seller
You can try to negotiate with the seller in paying for some of your closing costs. Buyers can ask for credit or to cover lender expenses during the offer and negotiation process