Aug 6, 2009
Your Home Appraisal –What’s the Big Deal?W
Think about why this is true. A good appraisal is the best reassurance that the lender won’t lose its pants on the transaction. If the borrower defaults, the lender still has a marketable property that can be sold to recoup its losses. All of which makes it understandable why lenders are so picky about appraisals. And with recent changes in the industry, the focus by lenders to obtain good appraisals is at the forefront.
Appraisals typically cost anywhere from $350 to $400. However, if the house is gigantic, multi-unit or in the boondocks, it could run more. The cost varies on property type, location and square footage.
The most common type of appraisal is the Uniform Residential Appraisal Report (URAR). It consists of interior and exterior photos and sometimes (depending on the age of the home), a complete cost breakdown of the property and comps (comparison sales of homes nearby that meet the proper criteria). These comps help determine the “market” approach. Each comp sale is adjusted in value when stacked against the home being evaluated (the one you’re buying or refinancing). Usually you will see a comp below the value of your home, in line with the value of your home, and a third above the value of your home. Kind of like the three bears. But if the valuation gets tricky, you can see fourth, fifth and sixth comps. The net value of the comps is estimated based upon the approaches used to come up with the appraised value of your property (meaning the appraiser performs some type of calculation that’s kind of like an average, but not necessarily a true average. Confused yet?)
URARs also, typically but not always, reflect a cost approach, which determines what the value would be based upon what is estimated it would cost to rebuild the home, less depreciation. The final estimated value of the home is then determined by using a melding of the market approach described above and cost approach (if applicable).
Lori Babb, Staff Appraiser for Mortgage Investors Group of Knoxville, TN, further explains comparables. “The best comparables are those similar in size, style (ranch, basement rancher, 2 story, etc.), age, and are close in proximity to the dwelling being appraised,” she explains. “Unique properties will typically require more adjustments than the average properties.”
So, say you’re Bill Gates and want to secure a mortgage on a $200,000 home (I know, it’s ridiculous, but I’m trying to make a point). He’s got the best credit profile a lender could imagine, yet the house appraises for $175,000. Deal or no deal? You better believe it’s no deal. The sales price will have to be lowered, or Mr. Gates will just have to pay cash for his new home (you think he can afford it?). The point is, your average Joe won’t go ahead with the deal without a price adjustment, and he will be obligated to pay for the appraisal regardless of the outcome of value.
Dan Tyrell, principal of Knoxville area’s Tyrell Appraisal Service, Inc., has this comment about value, “When determining value of a single family house, beauty is more than ‘skin deep’. Fresh paint, new carpet, new appliances, and nice landscaping all enhance the marketability of a house. Not so obvious items also impact the appraised value of a house. For instance older houses that have replaced plumbing/electrical systems, updated HVAC systems, newer roofs, replacement windows, etc. lower the effective age of the property which in turn increases the appraised value.”
There are other types of appraisals that are not as common, like an Automated Valuation Model (or AVM). In this case, different factors combine to ensure the value of the home (it’s worth $200K, but your loan amount is only $100K) and your unbelievable credit worthiness (800 credit score!), allowing you to skip purchasing a typical appraisal. You may also only be required to get a “drive by” appraisal, where the appraiser just inspects the exterior of the subject for size, looks at the lot and makes you wonder who that person standing by your mailbox is.
Most lenders control what appraiser is used to determine the value of your home. After all, it’s their money on the line. The appraisal is such an important factor to the mortgage transaction – make sure you’re satisfied with the results. Your lender will make sure it is satisfied!
Watch the video related to home appraisal
Quicken Loans TV takes you through a full real estate appraisal home inspection in this informative video – part 1 (steps of the appraisal and the front room appraisal) of the Quicken Loans Appraisal series. A home appraisal is something you’ll need when getting a mortgage. For more information on appraisals go to www.quickenloans.com
Help answer the question about home appraisal
How to obtain a copy of my home appraisal?
I purchased a house 2 years ago and asked for an appraisal of my home at closing. To my knowledge, it was never sent to me. I’ve tried to contact the loan officer i worked with to see if she would have a copy of it in their records. She will not answer or return my calls. I need to have it by Sunday if at all possible. Does anyone know if my loan officer would have the appraisal in the first place, or do I need to enquire about it somewhere else?
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Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.
In my part of the land a buyer does not do repairs to a house they don't own yet. What if you do the repairs and the deal falls through?
You are getting a very good deal on the interest rate with the credit scores you have.
All FHA and VA loans include Taxes and Insurance payment so you need not worry about that.
With them paying off your apartment lease and the reduction in the asking price that is money in the bank for you or money you will or did not have to pay.
The only thing that you are being charged for really is the two months of mortgage that could have been rolled into your loan.
In order to find out you would have to look at and understand your HUD-1 closing document that was given to you by the escrow closing agent. If you do not understand it call your mortgage broker or go to the closing agent for an explanation.
Nothing sounds fishy, apparently you were treated really good.
I hope this has been of some use to you, good luck.
"FIGHT ON"
oh no =[ this is a sad story..
Go for his friend and devorce him..
buy a gun for self defense becuase he sounds abusive and a rage.
if you dont move on it just shows how weak you are. get it together and do something..
= im really sorry he thinks he's better than you
You will need to write a check to submit with your offer. This is called earnest money and it shows the seller that you are serious about buying the house. Your Realtor will tell you what is an acceptable amount. If your offer is declined then you get the check back. If it is accepted the Realtor keeps the check and the amount is deducted from what you owe at closing. You will pay in full at closing. With a cash sale, you should be able to close in 10 days – 2 weeks. You can ask the Realtor how many people have been looking at this house and if there are other offers. Until the bank accepts an offer then you can keep bidding higher. Once the bank accepts an offer and signs a contract then they cannot consider other offers. You could always ask the Realtor to let you know if a higher offer comes in so you can raise your offer. I don't know if he/she will or not but you can ask. The house is sold as-is, which means the seller isn't going to do anything to the house to improve it. You will still want a termite inspection and probably a home inspection. You don't need an appraisal since you are paying cash. Title insurance is up to you. You should have an attorney do a title search. The attorney will uncover if there are any outstanding liens, etc. A home warranty is up to you, as well. It would cover the heating & a/c, plumbing, electrical, hot water heater, etc. Ask the Realtor for information. Usually they have pamphlets from the home warranty company that they use.
I am so sorry for your problems but your case is the prime example of why every home buyer should have an inspection of the house done before signing the dotted line. You need to spend the money to contact a real estate attorney, he is the only one who can answer your questions and really help you.*
Although I agree with portions of what the other posters stated, I don't agree with other parts.
An appraiser is not an inspector, true. But an appraiser has a copy of the contract, so they can know the particulars of the transaction. AND you can make a copy of the inspection report available to the appraiser.
I am surprised that the appraiser came back with no required repairs, sounds like there were some condition issues that would have been red flags. Have you or your agent spoken with the appraiser? Was a copy of the inspection sent to the appraiser?
You might try speaking with your lender about making other information available to the appraiser and maybe doing an amended appraisal. I have had this happen in the past, I don't know if now there is an "arm's length" policy that would make this impossible.
If you do not have a real estate agent representing you..tsk,tsk. You might have saved yourself a lot of stress and trouble. If you still want the house, you will have to be your own advocate and push to make these things happen. Otherwise, it looks like you will lose the house, your earnest money, the cost of the inspection and the cost of the appraisal.
Good luck.
Try to talk to the broker, you have to insist that they will get someone to finish the termite otherwise tell your agent that you are not going to buy the house since it s a major problem and they will be no commission for him/her.
I bought a house that had a previous problem with termite the seller had someone to service the house it was $550.00 that she had paid and I could continue the service for as long as I wanted for a fee of $100.00 a year.