What is an appraisal in Real Estate? If you’re buying or selling a home it’s really important that you understand this process. This week I’m going to tackle the home appraisal from the buyers point of view.
Hey everyone, welcome back! It’s Cori with Monmouth County Dream Homes, at RE/MAX Central located right here in Marlboro Township. If you want to stay up to date on all things Monmouth County and Real Estate then you’re definitely going to want to subscribe to my YouTube Channel. You’re also going to want to hit the little bell icon so that you’re the first to know when my new videos are posted every single Monday!
If you’re thinking about buying or selling a home you may have questions about the appraisal process. As your Monmouth County and Marlboro REALTOR®, I have been helping people buy and sell their homes for over 15 years. I have been involved with my fair share of appraisals, so I’m here to let you know what you should expect.
So let’s get started
What is a home appraisal?
An appraisal is the process of developing and communicating an opinion of the value of a home or other property. That’s all it is…. an opinion of value and this opinion is given by an appraiser!
Why do we need appraisals?
If you as the buyer is getting a loan to purchase the property. The appraisal is ordered by the lender, and it is done because the bank needs to be sure the value of the home is sufficient to cover the debt. The lender needs to be sure that they are making a safe investment.
Many people think that if a buyer is paying cash there won’t be an appraisal. That is NOT true. A cash buyer is entitled to conduct an appraisal.
What are appraisers looking for?
Before the appraisal even begins the appraiser is going to pull data from a couple of different sources. He or she will gather information and will most likely start with the tax records. Then they will check to see what the current assessed value is. The next step will be for them to check all past recent sales. Bonus Tip, Your appraiser will not and should not use zillow to gather information. My advice, if they do, FIRE THEM IMMEDIATELY. Information should come from the MLS and tax records ONLY.
Remember, the appraisers are looking at the condition of what is permanently part of or attached to your home. They are not looking at the decor or furniture. The most important things are your homes physical characteristics, age, square footage, number of bedrooms and bathroom, lot size, location and possibly even the view.
How do they really calculate the appraised value?
Most will be using the comparable sales price approach method. An appraiser will use market data that is most comparable to your home. Same style, square footage, number of bedrooms. Keep in mind they will study the past 3 months worth of sales, and if they have to they will go back as far as 6 months. They really do not want to collect any data older than 6 months. The appraiser will focus on location, age, condition and similar amenities that the homes offer. They can also make adjustments if needed.
Bonus tip, Be sure your agent shows up at the appraisal and hands the appraiser a cma as well as comparables and a list of all improvements.
So what do you think? Do you feel more prepared to tackle the home appraisal process? If so, throw me an “I’m ready!” in the comments below.
What does the appraisal mean to you as a buyer?
If you’re buying home you need to know that if the appraisal doesn’t come back at or above the purchase price, it may be difficult if not impossible for you to obtain a mortgage. So having said that, if your appraisal comes back low, you will be forced to make some tough decisions.
You do have the option to go back to the sellers and try to “renegotiate” the price. Maybe they’ll be willing to lower their sales price, OR you will be forced to put down additional money on your down payment..
When an appraisal comes in low, it’s never an easy situation. I will have a video coming out in a few weeks that goes into much more detail about how to handle a situation just like that. A low appraisal.
So there you have it. Enough information to get you ready as a buyer for your home appraisal. Do you feel more prepared and informed about the whole process? I sure hope so. I made another video about how to prepare for an appraisal. You may want to take a peek at that video as well.
Thank you so much for joining me this week. I will see YOU, next Monday!