When buying, selling, or refinancing an existing mortgage, knowing its value is a key factor. This is called the home appraisal process and it gives an unbiased financial valuation of the property.
The home buying process may seem complicated, especially for first-time buyers. Knowing the home appraisal value assists in making the process better. It allows the buyer to know the fair market value of the property.
Realtors or title companies usually come in handy to offer much-needed professional assistance. Understanding the process allows you to have more confidence and a sense of security when engaging in buying or purchasing a home. Besides these two, there are other benefits to having a home appraisal.
What Is a Home Appraisal?
A home appraisal is a professional impartial determination of the value of a home. The entire process takes 7 to 10 days. Usually, when a home is on sale, the financing institution lending money to the buyer asks for an appraisal.
The physical condition, location, and other features are used to gauge whether the requested price by the seller or the amount requested by the buyer is reasonable.
How is a Home Appraisal Done?
The lending institution arranges for a certified appraiser to carry out a physical inspection of the interior and exterior of the home. Facilities and improvements are included in the appraisal. These include the number of bathrooms and bedrooms, size of the house in square footage, landscaping features, electrical systems, and the garage space.
It is good to note that ornamental elements like furniture and décor are not included in the appraisal. After a thorough walkthrough of the premises, the appraiser notes any features that add to the value of the home and or any necessary repairs required. The homeowner bears appraisal costs.
The appraiser also familiarizes themselves with the neighborhood the home is in and compares the sale values with other properties that are either on the market or recently sold homes. They then compile and give a comprehensive appraisal report on the home inclusive of photographs of the home, comparable sales values, and other relevant data.
Bear in mind that a home appraisal and a home inspection are different. It is recommended that even before you start negotiating the sale price, it is good to request a home inspection. These two processes allow you to have a clear picture of the property you want to sell or purchase.
Benefits of a Home Appraisal
Fair Mortgage Value
Mortgage lenders are the ones who benefit most but as a home buyer, you benefit too. With a home appraisal, you are guaranteed that you will receive a fair mortgage from your lender proportionate to the property value.
In the same way, a lender can use the appraisal report as evidence to give you less money due to low appraisal value, the same applies on your end where you can use the report to get more money if the home you are interested in has a high appraisal value. In cases where the price increases, the appraisal can assist a buyer willing to take a bigger mortgage, sign a purchase agreement, and own their dream home.
Gives You Negotiating Power
As a buyer, the appraised value of a home helps you in negotiating for a lower purchase price on the property you want to purchase. If the home value of the property you want to buy is lower than the selling price, the appraisal helps as proof to the seller that what you are offering is equal to the value based on professional appraisal bringing you closer to homeownership.
Reduces Insurance Expense
If you want to purchase a home through a home loan, insurance is usually included in your monthly payment plan. It is included until your principal loan balance reaches 78 percent. One of the advantages of a home appraisal is it helps in showing that your balance has reached that level hence getting rid of the private mortgage insurance expense earlier on.
Extend a Line of Credit
If you are a homeowner, you can obtain a loan to improve it and use the home as collateral. The mortgage lender will want to know the precise value of your home to determine how much they can give you. A home appraisal will show the lenders the true value of your home as collateral to get the loan you are looking for.
Most homeowners take up the home equity line of credit option. This is a loan based on the financial value of the owner’s property. It is calculated on how much the homeowner has paid towards the home and its improvement. This can only be determined by a home appraisal.
Know the True Value of a Home
It is a negotiating tool for real estate investors, homeowners, and homebuyers because it shows the true value of a home. It helps in moving the sale transaction forward, helps buyers obtain loans, and helps the sellers plan adequately for the future.
If you are looking to renovate and then sell, it is your biggest tool. By knowing the true value of the property, you are better placed in knowing what kinds of offers you will entertain. The appraisal will give you a better understanding of the resources you will use to your advantage. As a seller, you want to maximize the value, and only through the home appraisal process will this be achieved.
Most lenders find a home appraisal valid for three to nine months. Therefore, it is important to have your home appraised regularly if you are a real estate agent or investor. For homeowners, the frequency may be less although important too so that you can keep up with the marketability of your home.
Work with Anabella Jiminez today
Our experience in the real estate business has grown over the years and we ensure that our clients, both buyers, and sellers are satisfied with our services.
We understand the real estate business is a tough one and we work toward ensuring that we offer the best services in the industry.
Get in touch with Annabella Jiminez at (323) 304-5760 for more information on the home purchase and valuation process. If you want to visit us, we are located at 2901 West Beverly Boulevard Montebello, CA 90640.