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What is an Appraisal And Why is it Needed?

Wednesday, April 24, 2019   /   by Dixie Simon

What is an Appraisal And Why is it Needed?

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Congratulations!  You have made the decision that you are ready to put your house on the market and begin the journey to find your next home. Working closely with your Real Estate agent will help facilitate as smooth a process as possible.  There will be many tips and suggestions they may provide, and they will be able to help you understand the different steps that will need to be taken to get your home sold!

 

One important thing to be aware of and plan for is the appraisal.  An appraisal is a report that is completed after a visit by a state licensed appraiser in which the fair market value is determined.  There are many factors that go into completing the appraisal which is required by mortgage lenders before they will lend money on properties. This is to help assure the lending company that they are not lending more than the property is worth which assures them if borrowers’ default on the loan they can sell the property and recoup their investment.

  

Normally the appraisal is done once an offer has been accepted. It is part of the process for the mortgage lender to complete the loan. There is a fee involved with the national average being about $400 with some states being as high as $800. The appraisal is an unbiased, third party, estimate on the fair market value of your home. The appraisal itself is usually approximately 30 pages and, in addition to information on your home, it includes comparisons of other homes currently for sale in your area and may also include some that have recently sold.

 

Things that are used to help the Appraiser reach their determination are the location and condition of the home, square footage, any upgrades that have been completed, number of bedrooms and bathrooms, view, etc.  One way to remember what they use in their determination are items that are permanently part of the home or property.  Décor and furniture do not play a part in the final appraisal value but it is a good idea to have the home looking its best for the visit by the Appraiser.  Along with this, they do deduct for things that need to be completed.  For instance, if the siding or roof needs to be replaced this will negatively affect the appraised value. This information compiled with the comparable properties either currently for sale or that have recently sold will complete the report.   

 

Once completed, the report will be submitted to the lender who requested the report.  By law, a copy is to also be given to the property owner.  The appraisal is then used to help the lender agree to loan the amount agreed upon but if the appraisal comes in too low there may be additional negation needed between the seller and the buyer.  The seller can decide to accept less or, in some cases, the buyer may decide to pay the difference between the agreed upon sales price and the appraised value.

 

Understanding the appraisal process and its role in the final outcome, whether you are the seller or the buyer, is important. Being prepared for the appraisal will help achieve a higher value being determined which will benefit all involved.  Remember, the Appraiser will focus on things that are a permanent part of the home but cleaning, fixing any small issues and leaving your home at its best will help its value shine through.

 


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Haven Real Estate Group
Cambria Henry
304 W Pacific Ave; Suite 360
Spokane, WA 99201
509-590-4701

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