Are you planning to sell or buy a house? If you are selling or buying a house for the first time, you must be thinking about the price of the property. While correct pricing is crucial, another thing that is important when it comes to selling or buying residential property is the residential appraisal.
Appraisers help people understand the dollar value of their property. An appraiser will look for similar properties in the area to figure out this dollar value. In addition to this, the condition of your property is also considered.
When people take a loan from a bank or other sources to buy their homes, they likely have to get residential appraisals. In fact, mortgage lenders will require a home appraisal in the first place.
If you want to learn more about residential appraisals, this post is for you. We have prepared a guide that will help you understand these appraisals better. So, here are a few important things you should be familiar with about home or residential appraisals.
1. Appraisals are the bank’s insurance policy
The first thing that you have to understand is that the bank or any other mortgage lender is taking a risk when lending money. That is where a home appraisal comes into play.
This appraisal ensures the lenders that the asking of the home is true or worth it. Now, why is it so important?
If a buyer defaults on a loan, the only option left with lenders is to foreclose on the property. They can then try to sell the property. So, if the property is not worth the money asked by the buyer with the loan, the lenders are never going to get their money back.
That is why the bank typically approves a mortgage only when it is below or equal to the appraised value.
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2. Appraisals do not take more than 20 minutes
Appraisers do not get too much time to spend on a property as they usually have a busy schedule. This is especially true for the hot housing market. That is why they usually spend no longer than 20 minutes at a property. The remaining work is done at the office.
They physically examine the size of the property, and other details, such as the number of bedrooms and bathrooms and living area.
3. Any sort of damage can affect the appraisal
Before any residential evaluation, it is important for the seller to repair any damage ahead of time. Any sort of damage to the property can have a negative impact on the appraisal.
These damages may include –
- A hole in the wall
- A crack in the windowpane and doors
- Scratched up doors
A seller should fix these damages before the appraiser arrives.
If you are looking to sell your property, you should be familiar with the residential appraisal process. The above-mentioned points are some of the important things everyone should know about residential appraisals.
