Appraisal Process

Today’s home buying market has many challenges for Buyers. With homes selling over list price, appraisals have become a bigger challenge.

“A home appraisal is an unbiased professional opinion of a home’s value based on recently sold properties nearby. It is conducted by an appraiser who is an independent third party contracted (often by a lender) to establish a value on a property.”

Experience in the appraisal process has become one of the key factors for us (The Boutwell Team ) or Real Estate agents to provide Buyers a better chance in closing on a home. We gather as much information about the home to provide current fair market value.

• Recent sales of homes that are comparable
• History of home values over past year or so to show trend in values
  • What has appreciation been from 180 to 360 days as compared to last 180 days. If home values are rising quickly, it may not take much time for values to reach amount paid over appraisal.
  • How many recent sales sold over list and how much over
  • What was the condition of the homes sold (age, updates, lot location, schools)
  • How many competing homes were on the market at the time of sale
• Interest Rate Increasing. It’s predicted we will have multiple rate increases over next year or so. Paying over appraisal while rates are lower may keep payments down.

This information is helpful to make as an informed decision as possible. There is much to consider!

• If you pay over, how much?
• Should you wait to buy until home market changes? When will the market change?
• How much cash do you need to close when value is over appraisal?
• Does Buyer have the available cash to cover the difference?
• Drop out of contract

The best way to deal with appraisals is to talk about the possible outcomes before paying for an appraisal. We dont want clients to spend money if not needed. Our experience in the process can help you decide the best path to take. We can work out the pros and cons together to make the best decision.

A Final Note about Appraisals....

There are good appraisals/appraisers and bad appraisals. Not all appraisers have the same skills and work ethic.

Lenders pick appraisals in different ways. Usually, lenders will have a list of appraisers and assign in a rotating fashion. Other lenders may not have a list and do a search for area appraisers. This may be more prevalent if lender is not local. One large national online lender has an Appraisal Advisory Division that contracts with a local appraiser to measure the home and fill out a form. The Appraisal Advisory Division then determines the value without ever seeing the home, neighborhood, or other factors that define value. In my opinion, this is the least valid appraisal process and typically comes in lower than local appraisers. In short, these national online loans fall through more often due to their appraisal process causing Buyers to lose lots of time, money, and losing their dream home.