Whether your client is a buyer or seller, there is one step in the process that often leads to confusion: The appraisal. You can ease the confusion by being ready to clearly explain this link in the real estate chain.
For buyers and sellers, the appraisal is a daunting steps in the home-selling process. It also is confusion. Many sellers question why somebody is valuing their home after they have already determined a listing price and received an offer.
The appraiser is an independent third party and the appraisal can be seen as a tool to remove any emotion from a transaction between sellers and buyers desperate to complete the deal.
The appraiser’s job is to determine the current value of a property. Most of the work is done on-site where the appraiser will conduct a walk-through to determine condition. Walk the exterior and also evaluate any amenities, like a pool or finished basement.
The appraiser also will note any health or safety code violations and record the layout of the property.
Off-site, the appraiser may also evaluate the current real estate market in the neighborhood to help determine the value of the property.
Like real estate agents, appraisers are state licensed or have other certification. If the appraiser is a member of a professional organization such as the Appraisal Foundation, he or she likely will adhere to certain ethics codes and rules of conduct.
To answer the questions of why an appraisal is necessary, agents can outline that step for clients, too.
In many instances, the lender or financing organization will hire the appraiser. Why? Because it’s in the best interest for the lender to get a good appraisal.
Most loan agreements contain a value for the appraisal. Generally, the individual seeking the loan pays for the appraisal unless otherwise noted in the contract. Typically, an appraisal will cost from $300 to $600. The type of appraisal report type completed will affect the price.
There are several myths that agents may want to dispel regarding the appraisal. It is not
the same thing as a home inspection. The appraiser also does not work for the buyer.
They work for and are hired by the lender. They also will not provide a figure for the buyer to pay. The size of the house or accessories and amenities also doesn’t affect the price of the appraisal.
Lastly, not all amenities are the same. For example, if you’ve converted your garage into an extra bedroom, the appraiser may not be as excited as you.
Austin Fernald, a home appraiser in Orange County, Calif., notes that houses include garages for a reason.
“Most people want to park their cars where they are safely protected from the elements and break-ins,” he said.
For your clients, the appraisal is in investment of their time, money, and effort. They need to know what the property they are considering is worth and it also will help them secure loan appraisal.
One this step is cleared, it should be smooth sailing through the rest of the house-buying process.