You found your dream Westfield area home. Now it is time to cross all your “T’s” and dot all your “I’s” before it becomes all your own. And one of the first items on your closing checklist is the home appraisal. So, what exactly is that?
Your Guide to a Home Appraisal
The home appraisal is essentially a value assessment of a home and property. It is conducted by a certified third party and is used to determine whether the home is priced appropriately. It is also one of the “hidden fees” every buyer needs to be aware of when purchasing their home. According to Manta.com, Westfield area home buyers should expect to pay $363 on average for their appraisal.
During a home appraisal, the appraiser conducts a complete visual inspection of both 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 a deck, a view, or a large yard. The appraiser will also compare the property to several similar ones that were sold within the last six months (or less) in the area.
The final report must include a street map showing the property in question as well as the other comparable properties, photographs of the interior and exterior, an explanation of how they calculated the square footage, market sales data, and public land records, among other things.
After completion, the lender uses the information found in the home appraisal to ensure that the property is worth the amount they are investing. This is a safeguard 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.
Lenders do not approve mortgage loans for more than their appraised value. If your appraisal comes back below the agreed sales price, you must then make a decision about how to proceed with the sale. First, you might try to negotiate with the seller to lower the price. Second, you could come up with the difference between the appraised value and the sale price out of your own pocket. (However, keep in mind that this is in addition to your down payment and closing costs.) Or you may want to go with a third option…walk away. Talk to your REALTOR® to determine your best course of action.