EMBRACING THE APPRAISAL

October 2022 Real Estate Blog #Marysgonecoastal

Selling a house to a buyer with a Mortgage? Then expect their lender to require a home appraisal. Lenders want to ensure the buyer isn’t overpaying for the home and do not want to lend out more money than the home is worth. A home appraisal is determined with an in-person analysis along with a comparative financial analysis to determine the current market value. Comps nearby that have sold within the last 60 days are most ideal because they will best reflect current market conditions. A qualified appraiser should be licensed or certified—as required in all 50 states—and be familiar with the local area. The appraiser should be informed of all special features and any recent updates to the home. Also, the appraiser should be aware of any pertinent information about the neighborhood that may impact the value of the house. Appraisers are required to remain impartial and objective. A cost for a typical, single-family home appraisal ranges from $500 to $600, though that can vary depending on several factors including the size of the home, the value of the property, condition of the property and the level of detail involved in the appraisal. The appraisal fee is typically paid by the homebuyer. The appraisal is usually ordered by the buyer’s mortgage lender. A professional appraiser’s fees are regulated in part by the Dodd–Frank Wall Street Reform and Consumer Protection Act and must be reasonable and customary for the geographic market. When the appraisal report is complete, it goes to the
lender—not the homeowner or home buyer. Under federal regulations, neither
the buyer nor the seller can choose the appraiser themselves. The lender is also
prohibited from having a relationship with the appraiser so that there is a fair,
unbiased valuation of the home.

Home appraisal timings are key to ensuring a timely close. Appraisals can take
longer than that estimated timeline under certain circumstances. When mortgage
rates are lower, as in the past few years, with refinancing occurring, appraisers
were significantly backed up. Also, a busy and active market can slow the
turnaround time. Under typical circumstances, generally plan on at least two
weeks from appraisal visit to report being produced. If needed, some Appraiser’s
can place a ‘rush’ on the report process for an additional fee. If the appraised value is about the same or more than the buyer’s offer, great news, and
congratulations. What if it comes in lower than buyer’s offer? ROAD BLOCK!
Buyer’s agent will have to renegotiate the sales price with the seller, or buyer may
have to make up the difference in cost to successfully close.
Realtors are trained to do real estate comps for their clients. A comparative
market analysis (CMA) is a process used to determine the market value of a
property. A CMA is a crucial tool for listing agents as they determine a sales price
for a property. It’s also a tool for buyer’s agents who are advising their clients to
make competitive offers. Using the most current MLS data along with the
specific house and locale information to create a comparable price suggestion.
This does not replace a professional appraisal. Zillow Zestimate uses a
computer algorithm that weighs different data points that go up and down
over a period of time thus known to be generic not specific. Using a local
Realtor with a personal understanding of the demographics and dynamics of
the community to negotiate pricing on that home is important. Once the
professional appraisal has been generated for the Lender on the property, they
are very difficult to challenge.