Tina McManus' Blog
When you find a home that you love, you probably already have been pre-approved by a bank for a certain amount that will enable you to buy a home. Once you put in an offer on the home and it’s accepted, however, you may need to take a step back. The appraisal can help you to know what the value of the home actually is. The bank may decline your loan based on the appraisal This is one of the most important steps to obtaining the financing that you need to purchase a home.
What Is An Appraisal?
In a nutshell, an appraisal protects the bank from investing in a property that’s worth less than what they’re paying for it. This process also protects you as a buyer from buying a property that’s worth less than what you’re expecting it to be worth.
Although the appraisal makes sense financially, it doesn’t mean that the process won’t be emotional for you as a buyer and for the sellers as well. The appraisal can in fact make or break the purchase of what you consider as your dream home. There’s a lot of data that’s collected for the appraisal, which can cause nerves to be shot on both sides while the value of the home is being calculated.
What’s The Difference Between The Inspection And The Appraisal?
A home appraisal is much different than an inspection. The home inspection is important in its own right. As a buyer, you hire a home inspector to find any potential problems or hazards that could be big issues for you in the future as a homeowner. While property appraisers will make note of glaring issues, they won’t check out the nuts and bolts of the home like a home inspector will. The home inspector checks out everything from the air quality to the chimney to the toilet and sinks. There’s many things that will affect your home appraisal. In other words, if you’re a seller, you want to get major issues fixed before you put your home on the market. Home inspections will be very important for different reasons to you as a buyer since it will be valuable to you in the future. Appraisers may request an inspection if they notice something serious within the home, but they are more interested in the value of the property than the direct problems that are within the home.
Who Will Pay For The Appraisal?
Generally, the seller will pay for the home appraisal along with the closing costs. This can be a few hundred dollars. In certain circumstances the buyer may agree to pay for the appraisal, however.
What Goes Into Calculating The Worth Of A House?
Appraisers look at many different factors including:
- The square footage of the property
- The number of bedrooms
- How many bathrooms the home has
- The condition of the home
- How much have comparable properties have sold for in the area
- Safety issues
- Other factors pertaining to health and safety
The appraisal process can seem complicated, but once you’re educated on the matter, you’ll be prepared when it gets to that point in the home buying process.
When you’re searching for a home, perhaps the price of the house isn’t as important as the overall affordability of the neighborhood itself. While you have a long wish list of what you want for your property, if you search by neighborhood in order to help you fit your budget, your search may be much easier and help you turn up with a more affordable house.
Look At The Price
This seems obvious, but we mean that you should go a bit deeper. The list price of a home and reality could be two very different things. A house could be underpriced or overpriced based on the surrounding properties in the neighborhood. If you do a little research, you’ll be able to see what the going price for similar style homes is in the area and make a judgement based on that information.
Don’t Stick To One Neighborhood
You should take a peek around and look outside of the certain neighborhood that you find to be the most desirable. If you look just a few streets away, you could find out that the prices are better and the benefits of the area are the same.
You’ll choose your neighborhood based on what you’re looking for in your lifestyle. If you prefer to go out to eat, you’ll need to know what types of restaurants are nearby. If you like to walk in the park, being close to parks and recreation is of course important to you.
Know The Phrase Up-And-Coming
This description of a neighborhood can sometimes seem like a bit of a reach, but many times it turns out to be true. Once undesirable neighborhoods may become the place people want to be after a certain amount of time. The problem with this is that no one can be sure as to exactly how long this will take. Potential warnings for properties described as being in an up-and-coming neighborhood would be:
- There’s low sales in the area
- The value of the properties has actually been decreasing
- There’s little access to grocery stores, restaurants, and entertainment
Overall, use your judgement when it comes to what’s described as a neighborhood waiting to be gentrified. You could buy your own piece of gold, or you could be on the search for a dud.
Check Your Commute Times
Match the cost of different homes that you’re looking at with the reality of the commute times that you and your family are facing. How far are the kids from school? Will you be closer to work? Will it cost you more to get to and from work in the new location? While your commute costs aren’t exactly directly correlated with real estate, it’s definitely a part of your regular budget. You also don’t want to add a lot of time to your work commute if you can help it.
These tips should help you to make an informed decision about what neighborhood to buy a home in that will be the most cost-effective for you.