Have you ever wondered how the Appraisal process works?
Once you are under contract, the buyer’s lender will send out an appraiser to make sure the purchase price is in line with the property’s value.
Appraisals help guide mortgage terms.
The appraised value of a home is an important factor in the loan underwriting process. Although lenders may use the sale price to determine the amount of the mortgage they will offer, they generally only do so when the property is sold for less than the appraisal amount. Also, the loan-to-value ratio is based on the appraised value and helps lenders figure out how much money may be borrowed to purchase the property and under what terms. If the LTV is high, the lender is more likely to require the borrower to purchase private mortgage insurance.
Appraised value is not a concrete number.
Appraisals provide a professional opinion of value, but they aren’t an exact science. Appraisals may differ quite a bit depending on when they’re done and who’s doing them. Changes in market conditions also can dramatically alter appraised value.
Appraised value doesn’t represent the whole picture of home prices.
There are special considerations that appraised value doesn’t take into account, such as the need to sell rapidly, distress sales, relocation etc.
Appraisers use data from the recent past.
Appraisals are often considered somewhat backward looking, because they use sold data from comparable properties (often nicknamed “comps”) to help come up with a reasonable price. The will search and use the recent sold properties.
There are uses for appraised value outside of the purchase process.
For selling purposes, appraisals are usually used to determine market value or factor into the pricing equation. But other appraisals are used to determine insurance value, replacement value, and assessed value for property tax purposes and assess value for estate purposes.
Message from Karen:
If you are thinking of Buying, click on the button below (Click here to search ALL listings) and start searching all the available homes for sale in ALL of Greater Louisville and surrounding counties. If you find anything of interest and would like to check it out, just call, text or email me and I would be happy to set up an appointment for you to check out the property.
If you are thinking of selling, call me for a FREE home evaluation in your neighborhood, from staging, pricing, housing values, interest rates, how appraisers are valuing properties, now that the guidelines have changed. I would love to sit down and talk with you. Just call me and let me know how I can help with your real estate needs, buying or selling or both. I give exclusive representation. If you are not sure whether you want to sell for fear of not finding that perfect larger home, click on the Search All Area Listings properties below and start searching the areas and see what is out there. I do have a list of contractors whether you decide to remodel or purchase or both. I can supply you with a list of contractors. I would be honored and happy to help you.
Karen Rodriguez, Broker/Owner of Kentucky Life Realty
Notary, ABR, AHWD, CRS, e-Pro, GRI, SFR