The Basics Of Real Estate Appraisals
Mortgage lenders usually require a home appraisal to put a value on the property. Professional appraisers inspect the home and compare it to recent sales of similar property nearby. The appraiser will judge how much the differences between those properties and the home you want to buy are worth. Ultimately, appraisers come up with a fair market value for the property.
Lenders often require an appraisal because they want to be certain that the home is worth its purchase price and can be sold to cover losses if you default on your mortgage.
In New York, the cost of as appraisal is usually paid by buyers. The benefit of an appraisal is that they can stop you from paying too much for a property. If that happens, a buyer has an opportunity to try and renegotiate the purchase price. That alone can help make the appraisal fee worthwhile.
When you buy a home with your own cash, you’re not obliged to conduct an appraisal.
Typically, a home appraisal report includes:
Explanation of the valuation
A brief overview of the local market trends
Summary of the home’s characteristics
It’s important to note that home appraisers are not home inspectors. Don’t rely on their expertise to uncover structural problems.
Appraisers typically value your property in several ways: the most-common “comparables” valuation, or “comps,” for short, as detailed above, finds a value by comparing the subject property to other nearby sales. The “replacement cost” is what it would take to replace the home on that lot.
Sellers and agents may attend an appraiser’s inspection. However, they should only answer questions and provide information. Don’t try to unfairly influence or intimidate an appraiser. And keep in mind an appraiser is not allowed to divulge anything confidential at that point.
You may, however, ask to check the appraiser’s credentials and satisfy yourself that she has the requisite local knowledge to reach a fair valuation. That’s important, because some appraisers jump at any opportunity to grab a job, even if he or she does not know the area.
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