Getting ready to apply for a refinance? Selling your home? Are you wondering what your property might be worth beforehand? Here is everything you need for home appraisal.
When you first complete a loan application, you’ll notice there is an area where you estimate your property’s value or in the case of a purchase the sales price, where you enter the agreed upon price. Most people have a pretty good idea and if you’re not sure, just put down an estimate. When working with an agent to sell your home, your agent will provide recent properties that have sold that can provide an insight on what the property will sell for and when.
When you first bought your home, the appraiser was first provided with a signed copy of your sales contract. The appraiser then takes that information and compares your accepted offer with closed and recorded sales listed by the county. Most often the appraised value is the same as the sales contract. All things being equal, it was an agreement between you and the seller where the highest price you were willing to pay and the lowest price the seller was willing to accept met. Yet when refinancing, there is no sales contract. Your home is compared directly with recent sales. In order to achieve maximum value, there are some things you can do. And there are also some things you absolutely must do before the appraiser can complete the appraisal report.
You first want to present a favorable curb appeal. This is the first visual the appraisal will have upon arriving. There’s no need to plant new shrubs or landscaping but do make sure the lawn is freshly cut and free of debris. In fact, make sure all exteriors are clean and swept. Inside, get rid of clutter and have a clean living space as well. You don’t need to hire a professional crew to come through your home but you do need to pay attention to flooring and walls. A clean carpet and shining wood floors let’s the appraiser know you take care of your property and the home is in good physical shape.
What have you done to the property since it was first purchased?
Have you made any upgrades or additions?
Before the appraiser makes it to your home, the recorded price you paid will be researched and noted. The appraiser won’t know you remodeled your kitchen or bath.
Did you put in additional insulation?
Let the appraiser know about the upgrades you’ve made that wouldn’t be noted in the county records. The appraiser will walk throughout the entire house and if you have an attic it will be inspected as well. The appraiser is going to come up with a final value and that also includes making adjustments for items that need repair or further attention. If the appraiser notices cracks around a door jamb it could indicate foundation issues. Or simply peeling paint around the windows might be noted. After you’ve done all of these things, it’s time to back away. You don’t want to follow the appraiser around the house while the property is being inspected.
Your Own Checklist
Once you submit a completed loan application, your lender will order the appraisal from a third party called an Appraisal Management Company. The appraiser assigned will contact you within a couple of days to schedule the appraisal. But unless you’ve installed required safety items, the appraiser won’t be able to complete the appraisal and either cancel the appraisal altogether or file an incomplete appraisal pending the installation of these required items.
California State Law requires that all properties have CO (carbon monoxide) detectors installed in the main living areas on all levels.
Smoke detectors must also be installed on each floor and in each bedroom.
Next, make sure all hot water heaters in the home are double strapped to the supporting wall.
It’s important to note that if these requirements aren’t followed the appraisal cannot be completed.
This is very important for homeowners who are refinancing. If your interest rate on your loan is locked and will expire say within 30 days you want to avoid any delays while giving the appraiser enough time to complete a proper appraisal as well as providing your lender with plenty of time to complete the approval process.
The underwriter within the mortgage company won’t evaluate a refinance application if the appraisal is not included with the loan file. The same precautions need to be taken if you’re selling your home. You have a closing date looming and if the appraiser can’t deliver the appraisal on time this can also create yet another delay if you’re selling your home and buying another. It’s an unfortunate domino effect and your agent, the appraiser and the lender can’t change.
The appraiser is required to make an independent valuation of your property without any undue third party influence. It used to be that lenders could contact an appraiser directly to order and appraisal and even contest a completed appraisal when the value came in lower than required. That’s no longer allowed. You, however, are not considered “pressure.” There are things you can do on your own to help get the highest value possible and we discussed them here. But after that, the appraiser is off to complete the report. Just remember, that whatever you do, make sure you have the required smoke and CO detectors as well as properly securing your hot water heater per California statute.
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