Buying A House? Some Appraisal Do's And Don'ts
Do you plan to buy a home in the near future? Then you should be versed in the do's and don'ts of getting an appraisal. Residential real estate appraisals are a vital part of the purchase process whether or not they are mandated by a lender. What should you know about them? Here are a few key things to do and not to do.
Do Order Your Own Appraisal
As a buyer, your best interests are served only if you hire your own appraiser. The appraiser is an impartial service to value your home, but the best way to ensure a high-quality and reliable appraiser is to vet and hire them yourself. If the seller pays for the appraisal, you have less or no control over this vital element of your real estate investment.
Don't Panic If the Appraisal Is Low
A low appraisal is the fear of most homeowners and buyers alike. After all, it means that you may not be qualified by your mortgage company for a sufficiently large loan based on cost ratios. And for sellers, the fear is that buyers don't like to pay more for a home than it's worth.
However, a low appraisal isn't necessarily a bad thing for a buyer. It could just reflect that the real estate market is hot right now. If prices have risen quickly, comparable sold properties may not show today's higher prices. It may also happen because of cost adjustments or concessions within your purchase agreement. A disparity between bottom lines may not mean you don't come out ahead.
Do Have a Plan for Highs and Lows
An appraisal can come in as expected, low, or high. Both of the latter scenarios call for different responses to help protect your investment. If the appraisal is high, you have a more sound investment, which may alter your plans about things like down payment size, monthly payments, and the size of the loan.
To plan for a potentially low appraisal, talk with your lender about options to adjust your loan terms or qualifications. You may also want to have some reserves handy in case you need to increase your down payment. And your real estate agent may have tips for renegotiating your contract depending on the current real estate market.
Do Start By Meeting With an Agent
Want to know more about appraisals and your future purchase? Start by meeting with an experienced local residential real estate agent. With their expertise in the appraisal and buying process, you will be ready for any outcome without letting it derail your plans.
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