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.
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