Most people who work with the real estate market know well what the home appraisal process is. But in fact few know how it can impact their transactions.
Eventually, you will come across real estate finds.
However, often the process of valuing the price of the property can make the process somewhat complicated.
For you to understand what I’m talking about, according to 2020 data from the National Association of Realtors (NAR) appraisal issues are correlated with:
- 37% difficulties in obtaining financing
- 18% delays to implement contracts
- 9% Contracts ends
However, if you are making some kind of loan to buy a property there is no escape from such process.
In addition, understanding how valuation is done will expand your knowledge of the real estate market.
So, come with me to understand all the way to evaluate the price of a property!
What precedes the Home Appraisal Process?
The home appraisal process takes place after the offer is accepted.
Thus, the valuation is done after all the issues of price, credit and repairs have been well established.
If there is a lender involved in the negotiation, he will provide an appraiser to assess the fair price of the property.
However, there is another option. As a seller, you can choose to get a pre-list evaluation, which can help you lock in an asking price that will take you to the closing.
A pre-advertisement valuation can be especially helpful in case you face certain challenges in the price of your property. This can happen when:
You have a unique home that is difficult to find.
The real estate market is either high or low, so prices are changing rapidly.
Why is this process so important?
Because in fact, if there weren’t a process like this, there would probably be a lot of conflicts of interest when evaluating property prices.
It is no wonder that most businesses in the real estate market exceed the $ 250,000 required due to the valuation.
Thus, according to the NAR:
The Home Appraisal Process gives rise to an “independent and impartial analysis of the property”.
And the NAR adds: “Valuation is an essential part of the process of acquiring a home, as it guarantees the lender that the home has adequate guarantees to make the loan”.
It is important to stress that the stipulated value is made through a thorough and face-to-face analysis based on the size, location and conditions of the property.
In addition, this national process that the buyer is doing a fair deal and is not offering a value far above the real for the purchase of the property.
How much does a home appraisal process cost?
Online you will see that the evaluation fee is $300-$400
Nevertheless, a buyer or seller cannot directly require a valuation from a firm of their choice if it is for borrowing purposes
It is important to say that it is the buyer’s responsibility to pay for the assessment, and the fee is set by the lender, not the home appraiser.
In addition, it may be that the values will change if it is found that the evaluation of the property is more laborious than expected before.
Consequently, it is claimed that circumstances have changed and the buyer may have to pay a higher appraisal fee.
Why does the appraise issue happen?
Well, that is quite variable. But I’ll list here the main problems that arise in the home appraisal process.
The first and most common of them is to establish very high values for the property negotiated.
When the value set by the real estate agent is far above the market price, it is common to have problems reaching the closing.
After all, when the appraisal happens and the stipulated value is much lower than the previously negotiated price, it may scare the buyer and the progress of the transaction ends.
The second point may be in relation to encountering problems with the property that modify its value.
Let’s say that the appraiser finds bureaucratic issues that make reform impossible, for example. This could hinder negotiations.
Finally, it could be that the evaluator was inexperienced or does not know the area.
There are many unique factors that affect the precise appraisal of a property.
For the evaluation to achieve the true market value of the house, the geographic experience or the knowledge of the local evaluator can have a great impact.
What hurts a home appraisal process?
Basically, the appraiser will check everything that involves that property.
From the neighborhood and the local price of the property to the structural conditions of the property to be evaluated.
In this sense, there are many points that can hinder the establishment of a good price for the house.
For example, it is having bad structural conditions, being an excessively old house (especially with a bad quality of construction), the bad neighborhood.
In addition, factors such as leaks, mold or even termites make the price of the property below expectations.
Other internal issues that are directly related to the establishment of the fair price for the property are:
- Size of area
- Number and size of rooms (mainly bedrooms, bathrooms and kitchen).
In fact, design is much more than an aesthetic issue, it can bring convenience and functionality to the home.
It’s no wonder that many flippers make big profits by buying, renovating and reselling properties.
This whole evaluation process can last from a quarter of an hour to many hours.
However, you don’t have to leave home for the appraisal to be performed.
You just have to take some care not to appear in the photos that help in establishing the value of the property.
What comes next?
Well, I’m sure you’ll be wondering how long it will take for the result to arrive.
So, the evaluation report can be delivered within a week or more, but generally it takes a minimum of 10 days.
Please be aware that the evaluator may need to call, verify the license and see some details in the report.
If you want the review back soon, make sure your agent can communicate with the reviewer about any problems he may have with your home and license history.
As soon as the result comes out, if you are the salesperson you can request a copy of the evaluation report.
This report contains all the reasons why those certain values were chosen.
Then you will find in such copy photos of properties of the region that were recently evaluated and the proper comparative explanations between your house and the others that were used as parameters.
On average, the report is not very long, containing on average 10 pages or even less. However, in certain cases the reports can be over 100 pages long!
After the home appraisal process
Finally, after the appraisal process is completed, you must analyze whether the value stipulated by the appraiser matches the value established in the contract.
The good news is that 80-90% of the time the appraisal value is higher than the value marked in the contract.
If this is the case, you can celebrate, as negotiations will continue normally.
However, it may be that the value comes below what was negotiated with the buyer. This can generate some difficult questions.
After all, the interested buyer will rarely agree to pay more than is determined in the appraisal process.
Therefore it is of great value for you to request a prior evaluation in order to avoid these kinds of setbacks.
But in case they occur, you can use the negotiation skills of your real estate agent so that he tries to renegotiate the conditions of the buyer and reach a final value.
This way, you will avoid losing the contract. Remember that often the buyer is as interested in closing the deal as you are the seller.
Therefore, a low home appraisal value does not always mean the loss of the contract.
Conclusion about the home appraisal process
In short, this whole process is very important for relations within the real estate market to occur in the fairest and most honest way possible.
We at BR Capital USA want exactly that: to promote noble and socially relevant relationships among all stakeholders in the real estate market.
Thus, our company preaches that values should be the basis of any transactions so that the ethical bias always prevails.
So, not only will we help you sell or buy some property in a profitable and financially interesting way, but we also seek to promote the collective well being.
Our purpose is to unite profit with social sustainability, that is, to use capitalism as a means to achieve a fairer society with opportunities for all.
Finally, through our service as iBuyer you won’t have to worry about the whole home appraisal process, since we will provide all this for you.
In this way, we use our expertise in the real estate market to drive increasingly responsible and socially aware businesses.