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

What are Contingencies on a Contract?

What are Contingencies on a Contract?

Contingencies are commonplace in contracts of all kinds. A contingency allows for one party or another to legally back out of a contract in the event of some specific condition occurring. They are protection against the unknown. 

 In real estate, there can be contingencies inserted for either buyer or seller or both. These take many different forms and until removed in writing, either party may change their minds based on the result of the contingent event or issue.

  Some examples of home buyer contingencies: 

• Home inspections – condition of the home

 • Specialty inspections – mold, geological, roof inspections

 • Code Violations – an investigation into improvements made without permits

 • Lender appraisal – ensures the offered price is not too high 

• Sale of current home – allows the buyer to back out if they cannot sell their current home in specific time frame

 • Final loan approval – loan is ready for signature and close

 • HOA CC&Rs – review of documents to ensure rules and regulations do not infringe on enjoyment of property 

• Insurability – home owner’s insurance available at a reasonable rate 

Home sellers can also have contingencies included as well, such as one which states the sale is contingent on finding a replacement home. Contingencies are a fact of contract law. In real estate, they ensure that the offer is concluded as expected.

Home Buying doesn't have to be complicated or stressful. You can trust that I can advise you every step of the way. Contact me at Davis and Associates to help you answer all your Real Estate Questions. 

What to Repair in your Home Before you List

What to Repair in your Home Before you List

A lot of money goes into buying a new house so it is understandable if a seller feels hesitant investing even more money to fix up their current house prior to selling. However, sellers may not realize that some of the issues they live with everyday and consider minor, such as the hallway light switch or the kitchen sink that has plumbing issues,  may actually be considered major to home buyers.  These issues may even  prevent buyers from making an offer on a home or making a lower offer.  It’s crucial to keep your house presentable and in good shape before you list it on the market. That being said, read on to find out what repairs you might want to consider before you list on your house on the market.

  Roof Problems
A roof is one of the most important components of a home, protecting all that is underneath.  Additionally, roofs are major expenses to replace. Therefore, it is imperative to keep the roof well maintained and free of damage and leaks. Issues like water and sun damage, clogged gutters, and rotting will lead to bigger issues if not fixed timely. Tending to these items immediately will help prevent further damage and help present the home well.  Poor Maintenance Minor issues such as damaged flooring, paint chipping, and old carpeting can be easily fixed to give your home a renovation. Your goal is to make your home appealing so start by replacing anything that is heavily worn and adding a fresh coat of paint.  And these minor upgrades can be inexpensive because you’ll most likely see a return on investment.

 Plumbing
 Plumbing problems can result in minor or major issues and it is very important to take care of these issues right away as they can lead to further problems. Bigger problems such as water damage can lead to mold and easy fixes to leaky faucets can be replaced inexpensively.

Wiring Electrical problems can cause a wide variety of problems. Smaller fixes such as faulty switches, missing wire nuts, or damaged junction boxes can be fixed with a good electrician. Replacing a circuit breaker might be needed if they don’t match the amperage of your home. Some repairs are obvious to see and others aren’t so it’s a good idea to run a pre-inspection of your house before listing. After, review it with an Agent like me because I can advise you on which ones are the first priority.

Every property is different and each  home presents it's own individual attention before placing it on the market. To get your homes true value call me today to get things started.