By: Joshua Campbell
6 Things That Buyers Need To Know About Appraisals
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Home appraisals can be an important factor in any home buying or selling deal. An appraisal is a professional, unbiased opinion of the value of your home. As a buyer, appraisals are very important if you require a mortgage. Lenders require an appraisal to gauge how big of a loan you can qualify for. Banks do not want to hand out more money to buyers than the home is actually worth. For more information about appraisals here are the 6 things all buyers need to know.
Because an appraisal is vital to you securing a mortgage, the bank will order the appraisal, but you will need to pay the fee. The price depends on the property type and the location.
- Who Pays For The Appraisal
The appraisal is based on the home and the surrounding property. The appraiser will look at the interior of the property and analyze the bedrooms, bathrooms, floor plan, appliances, recent renovations, and square footage. They will also note any damages or imperfections. They will then review the exterior of the house, the lot size and secondary structures like the garage, shed, or pool house. They will then compare your property to other recently sold properties in the neighbourhood. They might also base their final price on what it would cost to build your existing house today.
- What Appraisals Are Based On
The appraiser will need to complete a report to give to your bank. This report includes photographs of the property, a street map, an exterior image of the house, how the square foot was calculated and other information regarding the current market.
- What Is Included In The Appraisal Report?
To conduct the appraisal of the house can take anywhere from 30 minutes to 3 hours depending on the property size and the condition the property is in. The appraiser will then need time to compare recently sold houses in the neighbourhood and the current market value of similar properties. This process can take a few days to complete. Once the report is completed it will be directly sent to your lender. If you would like to receive a copy, you will need to explicitly ask for one.
- How Long Does It Take To Get The Appraisal Report?
An appraisal is one of the first steps in the closing process. An appraisal takes place after you have given the homeowners a deposit. It is important to note that at this point you should be pre-approved for a mortgage.
- When Do Appraisals Take Place
- What Happens If The Appraisal Price Is Lower Than The List Price?
In the case, the appraisal price is lower than the list price your bank will cap your potential loan at how much the house is appraised. If this should happen, you do have a few options. The first is to seek additional financing to cover the difference. The second is to try and negotiate with the seller to lower their price. The safest option is in your initial offer, write in a financing condition. This means that your offer to buy their property is conditional to you obtaining financing. If you do not obtain financing, you may walk away from the deal.
An appraisal helps banks protect themselves against lending more money than necessary. It also may protect you from purchasing a house without a full loan. For more information about getting an appraisal on a house contact us today.
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JOSHUA CAMPBELL (@knowledgebrkr)
Real Estate Broker
Coldwell Banker The Real Estate Centre, Brokerage
249 Avenue Road • Newmarket, ON L3Y 1N8