Appraisals are an Important Part of Your Home Buying Transaction
A real estate appraisal helps to establish a property's market value–the
likely sales price it would bring if offered in an open and competitive
real estate market.
Your lender will require an appraisal when you ask to use a home
or other real estate as security for a loan, because it wants to
make sure that the property will sell for at least the amount of
money it is lending.
Don't confuse a comparative market analysis, or CMA, with an appraisal.
Real estate agents use CMAs to help home sellers determine a realistic
asking price. Experienced agents often come very close to an appraisal
price with their CMAS, but an appraiser's report is much more detailed--and
is the only valuation report a bank will consider when deciding whether
or not to lend the money.
For homeowners, a real estate appraisal is the linchpin
to buying or selling their home. It allows the property transactions
to occur among the buyer, seller, real estate agent and mortgage
lender.
Before an Appraiser arrives, there are a few things
you should know. By law, an appraiser must be state licensed to perform
appraisals prepared for federally related transactions. Also by law,
you are entitled to receive a copy of the completed appraisal report
from your lender.
To facilitate the appraisal process, it's beneficial
to have these documents ready for the appraiser:
- A plot plan or survey of the house and
land (if readily available)
- Information on the latest purchase of the property
in the last three years
- Written property agreements, such as a maintenance
agreement for a shared driveway
- List of personal property to be sold with the home
- Title policy that describes encroachments or easements
- Most recent real estate tax bill and or legal description
of the property
- Home inspection reports, or other recent reports for
termites, EIFS (synthetic stucco) wall systems, septic systems
and wells
- Brag sheet that lists major home improvements and upgrades,
the date of their installation and their cost (for example, the
addition of central air conditioning or roof repairs) and permit
confirmation (if available)
- A copy of the current listing agreement and broker's
data sheet and Purchase Agreement if a sale is "pending".
- Information on "Homeowners Associations" or condominium
covenants and fees.
- A list of "Proposed" improvements if the property is
to be appraised "As Complete".
Once your appraiser has arrived, you do not need
to accompany him or her along on the entire site inspection, but
you should be available to answer questions about your property and
be willing to point out any home improvements.
Here are some other suggestions:
- Accessibility: Make sure that all areas
of the home are accessible, especially to the attic and crawl space
- Housekeeping: Appraisers see hundreds of homes a year
and will look past most clutter, but they're human beings too!
A good impression can translate into a higher home value
- Maintenance: Repair minor things like leaky faucets,
missing door handles and trim
- FHA/VA Inspection Items: If your borrower is applying
for an FHA/VA loan, be sure to ask your appraiser if there are
specific things that should be done before they come. Some items
they may recommend might be: Install smoke detectors on all levels
(especially near bedrooms); install handrails on all stairways;
remove peeling paint and repaint the effected area; provide inspection
access to the attic and crawl.
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