Home Appraisals
The purpose of an appraisal is to determine the market
value of the home you wish to buy. Your loan amount is
based on the value of the property. Even though you
agree to pay a certain amount, the lender needs to
independently establish a fair market value also. This
protects the lenders interests in case you are unable to
make the payments. The appraisal also protects you. It
reaffirms that you are not paying more for a home than
it is worth.
Most contracts include a clause that allows you (the
buyer) to cancel the purchase and get your earnest money
refunded if this occurs. In reality, most sellers agree
to renegotiate in order to close the transaction, since
they realize mortgages are based on the appraisal value
or purchase price, which ever is lower. Most people need
a mortgage to buy a home.
WOW! After closing you will have instant equity in your
new home. This means that you got a terrific deal on
your purchase!
A certified/licensed individual who has been specially
trained in this field performs the inspection. They will
research the county records to determine the age of the
home, and other tax and legal records pertaining to the
home. Then they will inspect the home in person. This
will include photographs and examining the general
condition of the home. Is it structurally sound or
barely standing, what type of construction, how old is
the roof, etc. They will look at every room for
condition, type of flooring, ceiling fans, upgrades, and
measure square footage. They also look for recently
replaced items, like the water heater, AC, appliances,
how updated the décor is (carpet), does everything meet
minimum property standard to include standards for
health, safety, and structural soundness.
The appraiser will then research the market area,
looking for comparable sales similar to your home. They
will then compile all this information into a report.
* Please note: This is not a termite or a home
inspection.
Lenders may need additional surveys or inspections if
necessary.