Home Appraisers
Getting a good home appraisal for your home is important. It's important to research different real estate appraisal companies in your area to make sure that they are a reputable company's that will appraise your home at the proper value.
A real estate appraisal will help to establish what your new custom home's market value will be. They will take a lot of different considerations and other factors into the appraisal of your home to establish what the likely sales price would be from an open and competitive real estate market for your area.
Your mortgage lender may require you to get an appraisal of your home in order to complete the loan package, or they may have their own appraisal service complete an appraisal of your home so that they can ensure that your home is worth the amount that they are lending your for the home, if not more.
Your real estate agent can give you a comparitive market analysis, or CMA, for your home, but that is not the same as a real estate appraisal, though sometimes the amount that they come up with for the CMA may be the same or similar depending on what gets factored into comeing up with the analysis. A CMA is a good source of information, but does not replace a full home appraisal from a real estate appraiser.
About Appraisers and Appraisals
Appraisers are licensed by individual states after completing the necessary coursework or other requirements that help femiliarize themselves with the real estate markets and values. The lender may use an appraiser on it's staff, or have a company that they contract with for their appraisals. The appraiser should be an objective third party that does not have any financial or other connection to anyone that is involved in the transaction. You will probably have to pay for the appraisal when you get your loan. You should consult with your mortgage lender for more information.
What's on A Residential Appraisal Report
Appraisals are very detailed, but the information included in an appraisal typically includes details about the property, along with side-by-side comparisons of three similar properties in the immediate area. An evaluation of the overall real estate market in the area. Statements about issues that the appraiser feel may be harmful to the property's value, such as poor access to the property. Notations about seriously flawed characteristics of the home, or physical damage. An appraisal may also include what type of area tha the home is located in, such as a subdivision, acreage, etc...
Residential Appraisal Methods
Sales Comparison Approach is where the appraiser estimates a subject property's market value by comparing it to similar properties that have sold in the area. These properties are called comparables, or comps. No two properties are alike, so the appraiser will compare the comps to the subject property, making adjustments to the comps in order to make their features more in line with the subject property's features. The result is a figure that shows what each of the comps would have sold for if they had the same features as the subject property.
Cost Approach is most useful for new properties, where the actual cost to build the home is known. In this case, the real estate appraiser will estimate how much it would cost to replace the home if it were destroyed.
What Does the Appraisal Mean to You
Your approval is accomplished early on in the loan process, but the bank's approval to the final loan usually hinges on a satisfactory appraisal. The bank has to be sure that it's investment will be convered in case you default on the loan. If your appraisal is lower than the loan amount the loan will probably be declined. Other factors that may influence the bank's approval of the loan are if the bank feels that the estimated time to sell the property is longer than the average home in the area. If the appraiser notes that the easement or access road to the property is a private road shared by others, the bank may want to see a road maintenance agreement signed by everyone who uses the road to verify that maintenance responsibility is shared by all parties.
An Appraisal Doesn't Take the Place of a Home Inspection
Appraisers will make notations about obvious problems with the home that they see, but they are not home inspectors. They will not test applicances, test the roof or chimney for leaks, or termite damage. You should never rely on a home appraisal to help you determine if a home is in good condition.
If the Appraisal Comes in Low
If your home appraisal comes in too low, there is no need to panice. There are often many steps that you can take to make the deal work. Most of the problems that are found on an appraisal can probably taken care of with a little bit of maintenance work on the home. Try to keep your cool, and remember to work through each of the issues, one step at a time.
Ron Mendenhall, owner of RM Construction, is definately one of the most knowledgeable and reputable sources of information in all aspects of home construction. RM Construction is one of the best custom home builders in Eldorado County. RM Construction can be reached by email by clicking on this link, or by phone at (530) 363-2784. Let him know that the El Dorado County Home Builders website sent you.
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