In any real estate transaction, a home appraisal is a vital component. Whether you are refinancing your mortgage, buying or selling your home to someone other than a cash buyer, you should understand how an appraiser determines the home's value.
How Is a Home Appraisal Conducted?
Appraisals are independent professional opinions of a home's value. In most purchase-and-sale transactions as well as refinance transactions, appraisals are required. When a home is being purchased and sold, an appraisal determines whether the contract price is reasonable, given its condition, location and features.
What Should Buyers Know?
You will undergo an appraisal when you are under contract to buy a home. The transaction proceeds as planned when the appraisal is equal to or above the contract price. The appraisal can, however, delay or stall the transaction if it comes in below the contract price. Both you and the seller may not want the transaction to fail. If the appraisal is low, you have an advantage over the seller, as you can use it as a negotiating tool to get the price lowered.
What Should Sellers Know?
It will be difficult to net a higher sales price if you wait for a cash buyer who doesn't require an appraisal. The last thing anyone wants to do is overpay for a house. If your area has recently experienced distressed sales, then the appraisal value of your home may be affected. If the sale price of nearby foreclosures and short sales has affected the price of your home, you can convince the appraiser that your home is worth more than those properties if it is in significantly better shape.
How Does the Appraisal Process Work for Refinancing Homeowners?
An appraiser's low estimate can prevent you from refinancing your conventional mortgage. The appraised value of your home must exceed the amount you wish to refinance. Underwater homeowners, however, can refinance without an appraisal if they have an FHA loan.
What Is the Average Appraisal Time?
It usually takes seven to ten days on average for an appraisal to be completed. A home appraiser inspects the home inside and out, measures its square footage and evaluates its features and fixtures for an hour or two. Using comparable sold homes in the neighborhood, they estimate the value of the home. then comes the appraisal report after the appraiser performs the physical inspection. Depending on how complex the appraisal is and the appraiser's schedule, it may take time for the entire process.
What Is the Average Price of an Appraisal?
The price of an appraisal depends on the house's location, size and condition. An appraiser may charge a flat fee or an hourly rate.
The home appraisal is just one more thing to cross off a closing checklist when everything goes smoothly. You can use an understanding of how the appraisal process works to your advantage regardless of whether you're buying, selling, or refinancing a home, but especially if you're buying your first home. Contact us at Edmonton Home Pros to speak to one of our advisors about your specific requirement and we shall help you sell your home or buy the home of your dreams.Posted by Stephen Lau on