As part of your contract, there will either be an appraisal contingency (if you're getting any type of financing this is 100% certain) or if you are buying in cash your agent can insure that you gt a n appraisal contingency. If you're financing then a large part of the mortgage application fee the lender is charging you is for an appraisal and you are entitled to receive a full copy of the appraisal report. In either instance should the home fail to appraise for at least as much as your contract price you will be permitted to either walk away from the deal without penalty or the Seller may elect to reduce their price to the appraised value. (This is typically what happens)
Most sellers are likely to be reticent to allow you to have an appraisal done prior to being under contract with you and you should always be leery of doing this, remember it's a two edged sword, and could come in for a higher number than the Seller might have accepted.
Visualize a series of COLUMNS, probably 4 or 5;
The First Column is the SUBJECT HOUSE and the others are COMP's.
Down the page we list FEATURES or FACTORS; such as # Bedrooms, # Baths, House Sqft, Lot Sqft, Fireplace, Pool, Roof, Garage, Fencing. Got it?
Now, in each box created, there will be a VALUE: Lets say the subject house is 915 sqft it would get --- or 0. And the first Comp house has 2500 sqft, it might get -100,000; which means that the house is WORTH $100,000 more because of the square-footage. (It is a negative number because the Selling price of that Comp house was approximately $100,000 more BECAUSE of the square footage and we have to deduct that $100,000 to bring them to equity.) Got it?
Now, lets say that the Subject house has $5,000 worth of new fencing and the Comp house has 25 year old OK fencing.: Then the SUBJECT house would get +5,000 and the Comp. house would get --- or 0.
When you go down the page, and enter everything, you get total Comparative Values on the two houses, which allows for the DIFFERENCES.
The two houses DO NOT have to be literally COMPARABLE, we MAKE then comparable with the VALUES.
So the house next door is larger, so what? We made up for that with the values.
Now, if you understand what I just did, then you will understand why;
1.) Two Appraisals will come so close together, and,
2.) Why the Bank will not listen to you about the results.
and in fact I will give you a third;
3.) If you hire your own Appraiser, he will end up with about the same numbers!
What you really want to do right now is enlist the aid of a Realtor to do a CMA;
This will cost yoy nothing and will tell you what you need to know.
A Realtor uses similar methods and numbers to arrive at similar conclusions.
Good luck and may God bless
I would not advise paying for an appraisal prior to buying the home. Once your offer is accepted the lender will send an appraiser of his own and you have will have incurred an unnecessary expense. Even though there are models that aren't an exact match, your realtor can do a CMA (Comparative Market Analysis) she can give her opinion of the property's value based on the condition, square footage, lot size, number of bedrooms, upgrades, etc... compared to the most recent home sales within a mile and base your offer realitively close those values.
Blanca Dover, REALTOR
Century21 Hometown Realty
If you're working with a savvy agent, they would know which lenders would work best with your Home of choice.
Appraisals are usually outsourced by lenders.
Lender guidelines on appraisals impact their loan decision.
Typically, lenders accept appraisals conducted by their own approved set of appraisers/appraisal management company , so your hiring an independent appraiser may not really help here.
Shalu Thaman - Realtor,ePRO
Keller Williams Princeton Real Estate
Cell # 609.577.5861
This was before Computers, before Real Estate Websites, even before calculators>
The Appraisers were truly independent, on no one.
Then we had a BUST in the Real Estate market, and the objectives changed:
The Appraisers were hired by the Bank to protect their interests. We didn't have a formal contract between them, but they both knew that the Appraisal had to be extremely conservative. The Appraisers had to do it that way, or they wouldn't get any assignments.
Nothing wrong with that; nobody wants to get into the trouble we had by having 125%+ Loan to Value ratios!
An Appraisal costs you about $400 and while it would be good for telling you how much your house is worth, it wasn't good for anything else! It was not transferable to anyone else, it had a short time limit, (90 days) and it was YOUR Appraiser, not theirs.
The alternative is having a Realtor do a CMA, (Comparative Market Analysis) which is almost as intense as am Appraisal, will yield approximately the same numbers, and does not cost $400.
We Realtors want to do them, because it exposes us to potential clients, it helps us learn and keep up on our beighborhoods, and it helps YOU, our clients.
If you want to feel better about the VALUE of the CMA, (who wants free advice/), you can give your Realtor a Card for dinner at a nice restaurant; very good idea!
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