Appraisals make the world turn. How good a movie is, how much an antique will fetch at auction, even a simple compliment stems from an appraisal. Home ownership is no different and much of the mortgage process is defined by an impartial licensed third-party appraising a property’s value.
We all inhabit a perception-based reality and the bedrock of that reality lay in the subjective valuation of absolutely everything around us. A movie’s revenue can live and die by the simple orientation of a couple of thumbs, like if there are two of them way up then that means the movie should not be missed! A compliment can emerge from the assessment of a pleasing scent, a haircut, new shoes, or even just from someone feeling good that day.
A home appraisal is structured more objectively and conducted by a licensed appraiser, but can still be swayed by simple adjustments to the presentation of a home. While you can’t easily hide a mold problem or water damage, an eye-catching upgrade to the kitchen’s counter tops can ultimately have a positive effect on the total valuation of the home’s appraisal.
It’s safe to say that the appraisal of your home or a prospective one will have a drastic effect on changing ownership of that property. How much you net from the sale of your own home and how much you pay to buy a new one is all contingent on an appraisal. While everyone hopes the appraisal benefits them, we all subconsciously agree that the impartiality of the appraisal is one of the most important factors.
In most instances, an appraisal becomes just another checkpoint in the process. Don’t expect sudden windfall with every assessment. Home ownership is meant to be a stable long-term investment that doesn’t fluctuate as wildly as the market may make it seem. An appraisal will give the homeowner the ability to mark the twain of their home’s valuation at that moment, which is an integral part of buying and selling properties.
. If the valuation of the property is low, then the amount a lender is willing to offer lowers as a result.
Home equity loans also hinge on the result of an appraisal. If the valuation of the property is low, then the amount a lender is willing to offer lowers as a result. If the appraisal doesn’t meet with the homeowner’s expectation, they can scour the report’s notes that justify the licensed appraiser’s decision. There are also certain external variables that affect the total appraisal of a home. Comparable homes in the surrounding area, charmingly referred to as comps, affect the valuation of the property being appraised. Market fluctuations have bearing on the result as well. Both the homeowner and prospective buyer do have recourse if they find the appraisal is not what they were expecting. Although, like sending back a steak at a restaurant, it may be wise to base the reasoning on more than just opinion. Just not liking what was written in the report is not as potent an argument as substantive evidence based on provable disparities between what was written and the actual state of the home.
Lenders are now required to provide applicants free copies of all appraisals and other written valuations developed in connection with an application for a loan to be secured by a first lien on a dwelling, and to notify applicants in writing that copies of appraisals will be provided to them promptly. See here for further information.
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