Wednesday, November 11, 2009
How Do You Really Know What Your Home is Worth?
Post by David Held
The first step in the process of selling your home is getting an appraisal, an estimate of what your house is worth. This is the key step in determining what to list your home for. The appraised value of your home most likely will not be the same as the “market value” for your home. Depending on the economy the appraised value might be more than the market value or some times less (not in your favor).
Ten Appraisal Tips are:
1. Continuously research the value of your home and homes in your neighborhood; pay attention to foreclosures in your area; they will drive down the value of your home.
2. Since appraisers use "comps" (comparable market sales) of local properties sold within the last six months to value your home, make sure to work with a great loan officer who will leverage their knowledge to research comps in your area, before ordering the appraisal.
3. If you use your own appraiser, research them first and ask your lender to cross check them for any potential issues that may delay the process. Great loan officers will always confirm your appraiser's credentials.
4. Direct your loan officer to work with local, experienced appraisal companies. Local appraisers have a deeper knowledge of the surrounding neighborhood and will likely be more readily available for the home inspection, to speed your appraisal process.
5. The appraisal report is yours to keep. Find out in advance who pays for the appraisal--many times appraisal fees are the homeowner's responsibility and have to be paid up front.
6. New lending regulations require two appraisals in some situations--ask at the beginning whether you'll need one or two.
7. Commit to your lender before committing to an appraisal. Being comfortable working with your loan officer is imperative. They often will be the liaison between you and the appraisal company.
8. Make sure any major repairs are completed before moving forward with your refinance. Structural damages drive your home value down and jeopardize the approval process for today's popular government-backed FHA loans.
9. Don't overestimate the value of making cosmetic home improvements. The expense is rarely justified because in the appraisal world, only improvements that add square footage will significantly increase home value.
10. Rely on market value rather than tax assessments for a realistic appraisal value--in today's market, tax value and current market value may differ widely, but your lender can only go by appraisal value.
Sources #1, #2, #3