If you're looking at buying a home, chances are you've been told that you will need to get an appraisal.
You may then find out that you are responsible for paying for the appraisal and that it can cost several hundred dollars.
Maybe you don't need to have an appraisal done. Is it actually required in order to purchase a home?
Usually, it is and is ordered by the lender. You will end up paying for the appraisal as a part of your closing costs.
So what are appraisals and why are they so important?
What is an appraiser?
To sum it up in a nutshell, the appraiser's job is to protect the buyer from purchasing a home for more than it’s worth.
Secondly, it protects a bank from lending money to a buyer who may stop making their mortgage payments down the line.
The importance of the appraisal
When a buyer borrows money from the bank and fails to make their monthly mortgage payment, the bank has to repossess the house (collateral) and resell to get its money back.
If the amount of the loan is significantly more than the value of the home, the bank or lender won't be able to recoup their losses.
How does an appraiser check the value of the home?
An appraiser primarily attains the home value based on comparable sales within the neighborhood. When we say comparable, the appraisers try to match the characteristics of your property to surrounding home sales as best as they can. This includes but is not limited to square footage, bedroom/bathroom count, lot size, and the ever so important “location."
The difficulty with appraisals
Homes aren’t always alike within a neighborhood. And if they are, some neighborhoods don’t really have a high turnover rate. What this means is that there aren’t very many homes being sold consistently enough to show a clear market value.
Why is it a BIG DEAL to have a good real estate agent?
Appraisal reports can cost anywhere between $450 to $600. This is a hard cost that a buyer pays whether or not the home is purchased.
Imagine you find a home that you love and write up a full price offer with your agent, only to find out it was priced 50k over market value? Bundle that with a $200 to $250 home inspection and you can see why having an agent run a CMA prior writing up your offer is so valuable.
Here at Mesa Properties, we can help you buy or sell your home by starting you out with a free CMA. Click here to request one!