Step 11- Completing the Bank Appraisal
First things first, what is an appraisal? An appraisal is a property and/or land evaluation completed by an appraiser who determines the market value. The cost can vary between $400 and $600 and is paid upfront by they buyer. But Jenn, what is market value? Great question!! And this is pretty easy to answer. This is the price that the market will bear for your home.
And I hate to say, there is not an exact science to this! I have literally had 2 appraisals done on the same property within a 2-week timeframe and there was a spread of $20,000! Crazy right?
The appraiser will pull similar homes in the neighborhood, or up to a 3-mile radius depending on if your home is custom, and then evaluate and adjust accordingly. I have seen some appraisers give a home an adjustment for $5000 for the size of the pool and others give nothing. Like I said, there is not an exact science to this.
Why is the appraisal needed? Another great question. When you are using a loan to purchase your home, the bank needs to know that they are not lending money on a property that is not worth the purchase price. It is a way to secure the value of their investment.
As agents, we do our best to determine what we think the market will bear and then we go to bat for our clients and work with the appraiser. Not every Realtor™does this, that is why who you hire matters!
Now that the appraisal is complete – the lender can put your file into underwriting and work towards your final approval for your home loan!
Join me next week as I share step 12 where we talk about the final walk-through and signing! Did you miss step 10? Catch it here!