Tuesday, March 23, 2010

5 Home Appraisal Myths

What is your home worth? Get an expert opinion, that will tell you the answer right?  Well maybe.  We expose the top 5 myths about appraisals and what they tell you.

Myth 1.  An appraisal is the same as a home inspection.
Buyers often treat these the same way but they have different purposes.  An appraisal delivers an opinion to the mortgage company about the value of a home; this is a great tool for pricing a home based on comps and the market.   An inspection educates the buyers about the condition of the home, it's building history and alerts them to repairs possible costs.

Myth 2.  A buyer should not buy a house for more than the appraisal.
While an appraisal provides very useful information about a property to the buyer the primary client is the lender.  An appraiser's job is to protect the lender.  They need to be conservative to make sure the lender is not caught lending more than a house is worth. 

Buyers who plan to live in a house should consider what they are willing to pay for. Sunny windows, a good layout , the shady side of the street, all these things are often overlooked in appraisals.  If a home fits your needs and offers unique personal value, you should be willing to pay for that up front, even if the bank doesn't value these aspects - you have to live with them, not your banker.

Myth 3.  A clean home increase an home's value.
A clean home has been proven time and again to increase buyers offers and final sale price, but there is no evidence it has any impact on appraisers.   These professionals are looking for specific items, working appliances, foundation issues, square footage.  They are use to looking past the clutter in most homes to see the items lenders value.

Myth 4.  Appraisers use a formula to calculate value and you have no effect on them.
While it is true that appraisers compare your home to other comps based on specific numbers it is important for you to help them understand how your home differs in terms of location, and features that are not always obvious.  Help them understand what you know about specific comps.

Myth 5. Appraisers do not have to disclose home defects to buyers
If the buyer is going for an FHA backed loan the appraiser is obligated to disclose any physical problems that are visible to the buyer.  But they are under no obligation to do this for non FHA loans.  So remember to ask for an inspection.