Home Appraisals 101 | Brian Scott Cohen Mortgages
Get the facts on home appraisals from Brian Scott Cohen, a mortgage lender in New York City.
Appraisals sound confusing, but they don’t have to be. Appraisals are a very big part of the home buying process. They set the market value of your home and are an unbiased opinion of the market value at a specific point in time, meaning the most probable price a willing buyer would pay for a specific property.
What do home appraisers look for?
Once the decision has been made to move forward and an offer is accepted, the lender will schedule an appraisal on the home. Lenders will always seek an impartial appraisal before they can issue a mortgage. This is done to ensure an accurate market value estimate of the property and that it is sufficient collateral to support the loan terms.
Your appraiser’s report will include a detailed description of several factors surrounding the property:
- Interior and exterior condition
- Room count
- Improvements, repairs, and renovations
- Plumbing and electricity
- Age of the structure
- Local market trends
- Condition of surrounding properties
What about indoor elements?
Square footage, quality of construction, and recent upgrades may also contribute to a home appraisal report. These reports involve a thorough review of the property’s overall quality, condition, and amenities/features to evaluate whether the listed price for the home is appropriate. If the appraised value comes back less than the listed price, the sale can be renegotiated or even canceled.
Who pays for the appraisal?
It’s covered by the buyer and is usually a few hundred dollars. These fees are usually noted in the loan’s closing costs.
If the appraisal comes in too low?
It depends, but the buyer may be able to negotiate a lower price to match the estimated value. A motivated seller may seek a second evaluation before moving forward with the estimated value. If the appraised value of the home is lower than expected, it could mean the home’s condition needs to be renovated and upgraded and a downward trend in the local market.
Is this an essential step in the homebuying process?
Arguably yes, it is because it ensures the true value of the home is being paid by the borrower and the lender. If I were in your shoes, as a homebuyer I would get the home appraised. It’s a relatively small fee for a large purchase.
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Equal Housing Lender, Brian Scott Cohen NMLS ID: 410025; OriginPoint LLC fka Guaranteed Rate Affinity, LLC (“OriginPoint”) NMLS 1598647; For licensing information visit nmlsconsumeraccess.org. Operating in the state of New York as OriginPoint LLC fka GR Affinity, LLC. Operating in the state of California as OriginPoint Lending LLC fka Guaranteed Rate Affinity, LLC.
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