What is a Home Appraisal?
You’ve found your dream home and now it’s time to cross all your T’s and dot all your I’s before it’s all your own. And one of the first items on your closing checklist is the home appraisal. So, what exactly is that? The home appraisal is essentially a value assessment of the home and property. It is conducted by a certified third party and is used to determine whether the home is priced appropriately. Below is a guide to the home appraisal process.
The Process for a Home Appraisal
During a home appraisal, the appraiser conducts a complete visual inspection of the interior and exterior of the home. He or she factors in a variety of things, including the home’s floor plan functionality, condition, location, school district, fixtures, lot size, and more.
An upward adjustment is generally made if the home has upgrades and/or features that other similar homes in the neighbourhood don’t have, such as a deck, a view, a large yard, etc. The appraiser will also compare the home to several similar homes that were sold within the last three to six months in the area. Because the real estate market changes constantly, what a person paid for the property might not be what it’s worth a few months later. If you are planning on refinancing or selling, it’s worth cleaning, updating your home and fixing small things to show your home in the best light.
What’s Included in the Appraisal Report
The final report must include a street map showing the property and the ones’ compared, photographs of the interior and exterior, an explanation on how the square footage was calculated, market sales data, public land records, and more.
After it is complete, the lender uses the information found to ensure that the property is worth the amount they are investing. This is a safe-guard for the lender as the home acts as collateral for the mortgage. If the buyer defaults on the mortgage and goes into foreclosure, the lender generally sells the home to recover the money borrowed.
Why Does The Lender Require an Appraisal
The lender hires the Appraisal company to give them an estimate on how much the home is worth and whether it’s a safe investment for the bank at the purchase price offered. Sometimes the appraisal will come back lower than what was offered, in which case the buyer will have to put up the extra money over and above the 80% that the lender will provide. Therefore it is wise to get a couple of opinions on the market value of the property in question before putting in an offer. You can also hire the appraisal company yourself and they usually cost around $400.
Appraisal Companies in Vancouver
There are several established firms in Vancouver you can reach out to like Lawrenson Walker, Adlaw Appraisals that offer appraisal services or check out this list of Best Appraisal companies in Vancouver by The Best, Vancouver.
Hope this Guide to Home Appraisal helps and if you have any other real-estate related questions, please reach out, I’m always happy to offer information, market reports and more.