Appraisals: Why you should get one!

There are many steps that go into buying a home. One of those steps is getting a home appraisal. An appraisal is a valuation of the property you want to purchase, simply the value of the home. But many ask, why do we need appraisals?

Appraisals might not seem as important as they actually are. If you are going to get a mortgage, many times a lender will require an appraisal. Lenders want to make sure that the property is worth at least as much as the loan. In the lender's eyes, a home is collateral for the loan. These are a few of the reasons why a lender orders the appraisal.

The appraisal is done by an independent third party. The person appraising the home must have no financial stake in the outcome of the appraisal, making the estimate fair. Mortgage companies usually have an AMC, Appraisal Management Company, who hire an appraiser to review the home. In turn, the buyer pays for the appraisal, amounting to around $500.

When an appraiser is at the home they are looking for a few different things. Property size is the first thing an appraiser looks at. They take into account the square footage of the home, number of bedrooms, and yard size. The appraiser also takes a look at the interior and exterior of the home. The type of materials and fixtures in and outside of the the home play an important part when estimating value. Improvements are another thing an appraiser looks for. Improvements and upgrades also add value to the home. Lastly, an appraiser looks for extras. Some extras would include fireplaces, air conditioning, sound systems, security systems, or outdoor items such as a pool, or gazebo.

This is the 4-1-1 on appraisals. I recommend that all of my clients get an appraisal not only to protect the lender but to protect themselves from over paying. If the appraisal comes back below the value on the accepted offer, I help my clients negotiate the home back down to the estimated cost. If the seller is unwilling to negotiate the price, my buyers are allowed to walk away and receive their earnest money back.

If you have any questions about appraisals or the buying or selling process please feel free to reach out to me! My cell is 317-650-5898 and my email is ermusleh@gmail.com