There are different steps involved in buying a home. A real estate appraisal, for one, is an important step in the home buying process. Until this day, people still have a lot of questions when it comes to real estate appraisals. Usually, people assume that their purpose is just like that of house inspections. There are also some people that think that if they get a low estimate, it will be bad for them. Before getting any type of real estate appraisal services, you should know the basics of the process. By finding out in advance, you will be more prepared to take on this crucial process of buying a home. You can click to get more info about everything you need to know about real estate appraisals.
Real estate appraisals matter when it comes to having your house loan approved. If there is no real estate appraisal done, then there is no loan. Knowing that not all home buyers can afford the total amount of a home they want to buy, they will need to get an appraisal before they can get their house loan. Again, when you do not get an appraisal, your house loan will never be approved. The main purpose of having real estate appraisals is for the involved parties to determine what current market value the home has. The sales price should then be determined based on the market value of the home.
Real estate appraisals are done to primarily protect the lender. Lenders do not want to become victims in buying a home that is not valued. This is the reason why prior to loan approval, real estate appraisal must be done. The lender pays close attention to the information provided by the home appraiser. The lender will only make a final mortgage decision once they have considered every detail made in the real estate appraisal. When a lender chooses to finance a property, they should be made aware of the correct market value of the property in question.
The home appraiser that will be used will often be the preference of the lender. If they are staffed with a home appraiser, they can choose to hire them or if not, they can get the services of an individual contractor. The lender will still have some say on the final decision of your house loan if you choose to get your own real estate appraisal services.
The use of either a sales comparison approach or a cost approach is most common in doing home appraisals. If the home appraiser uses the sales comparison approach, comparisons are done on the market based on other similar houses as the house you are planning to buy that have already been sold in the neighborhood. Meanwhile, the use of the cost approach means evaluating the costs that made building the property possible. This is the approach used by appraisers for new properties.