When you decide to buy a house, your loan officer will likely tell you that you need to have an appraisal done on the home before your loan will fund. Don’t worry if you aren’t sure what an appraisal is and how it works. Here is everything you need to know about real estate appraisals.
What Is It?
An appraisal is an unbiased valuation of the home. Your bank will contract with a certified appraisal company to look at the home and compare it to similar homes in your area to determine a value. The bank will rely heavily on the appraisal to determine if the amount you’re being loaned is appropriate. Lenders use appraisals to ensure that buyers aren’t borrowing more money than the home is worth. If you find that your appraisal comes in less than the asking price, then you’ll either have to renegotiate with the seller or pay the difference out of pocket.
How Is Value Determined?
Real estate appraisers Dallas TX will first inspect the home and document any upgrades, or damaged areas the home might have that will affect value. They then use the MLS to find recently sold homes less than a mile away that are similar in square footage and the number of bedrooms and bathrooms to the home you want to buy. The appraiser then makes adjustments in their report to the home’s prices to account for upgrades that one might have that another doesn’t.
For example, if a comparable home used in the report has a pool and the home being purchased does not, the price that the home was sold for would be adjusted to better reflect what it would have cost if it didn’t have a pool.
Do You Get a Copy?
After the appraisal is sent to your bank, then you’ll be given a copy of it. You will have access to all of the same information that the bank does. If you feel that the appraiser used a bad comp or adjusted the prices incorrectly, then you can talk to your loan officer about your concerns.