let’s talk : APPRAISALS- What to look for!
Okay let’s do a quick recap of the last month. We looked at homes. We put a home under contract. We had a home inspection. We negotiated with the seller based on the home inspection findings. Most recently, we received our appraisal. Let’s spend this week talking about that.
So, as we do, let’s talk Real Estate, let’s talk HOME APPRAISALS – WHAT TO LOOK FOR…
Let’s focus on how to read an appraisal report and what to look for!
#1 Confirm that YOUR property facts are correct
– Check for a correct address
– Check for correct square footage
– Check that the number of bedrooms and bathrooms are correct
ALL of these factors can affect the value of your home. Believe it or not I have seen them listed incorrectly in multiple appraisals.
#2 Check the VALUE that your home appraised for
– Are you shocked by the value?
– Did it appraise for what you expected?
#3 Check your COMPS
Most of the time, appraisers will use the Sales Comparison Approach where they compare your home to similar recent sales. When using the Sales Comparison Approach, the value of your home is based off of recently sales of similar properties within close proximity of your home.
– Do the comps make sense?
– How close are they to your property?
– Were they sold in the last 180 days? Comparables should be some of the more recent sales.
– Are they in the same school district?
– Are they in the same “type” of location? I.e. if your house is not located on a busy main road, the comps that are used should not be located on a main road either. LOCATION plays a huge role in the home value.
– Do the comps used have similar square footage?
– Do they have the same number of bedrooms and bathrooms? If not, were the appropriate value adjustments taken into account?
Talk with your agent to make sure that the comps used in your Appraisal report make sense!
If it the home you are purchasing is more unique or new construction and there are no true comparables out there, your appraiser may use the Cost Approach Method to determine the value of your home.
If you are purchasing an investment property, the appraiser may use the Income Approach. Should we break these approaches down further in a future LTRE?!
#4 Follow-up (If necessary)
If you do not agree with the value that the appraiser gave the home, then you can dispute it. Send your reasons for the dispute to your lender and they can express your concerns with the appraiser and ask them to reevaluate the home.
I personally had to do this with a Project Philadelphia when the property facts stated were incorrect, and the comparables used were outdated.
|Happy Wednesday! & Stay Healthy!|
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