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The Appraisal Process for Home Buyers

One of the most important aspects for all Idaho home buyers to understand is the appraisal process. An appraisal is important since it provides an objective market value of the home. It is a requirement when securing a mortgage because lenders need to know the actual value of the home when making their decision. We understand that the process can seem complex, which is why we will explain everything you need to know as a home buyer.

The Basics of Appraisal

The process itself does not begin until a concrete offer has come in, and an inspection has been conducted. The cost of appraisal will be the responsibility of the buyer, which means you should definitely plan for it. You can expect to pay around $300 to $400 depending on the neighborhood and property type. The process itself can take around 3 to 10 days, which means you must plan accordingly. It is vital to hire an objective appraiser who is fully certified and qualified.

Additionally, it will be up to the buyer to arrange the appraisal. The full details will be sent directly to the lender, but we recommend asking for a copy. This will allow you to see the specific reasons that contributed to the final figure.

Significance of Comps

The appraiser will be a professional that has a complete understanding of the area and property type. This will allow them to come to an accurate figure that provides a true indication as to the value of the home. One of the most significant factors involved in coming to this figure is the comparables, which are known as ‘comps.’ These are recently sold homes within a mile of the area that has similar characteristics to the property. When you are buying property in Idaho, these factors will be highly significant.

The comps will include things such as appearance, condition, space, and amenities. For example, a 5 bedroom home that has walls in poor condition, will have a lower appraisal value than similar-sized homes in the same area. An appraisal provides an accurate indication as to the true market value of a home. This is why lenders request the measure.

What to do When Appraisal is Lower than Final Sales Price

Naturally, the market doesn’t always align with the appraisal value. There will be instances where the appraisal value will be lower than the final sales price. You should be aware of the specific ways that this can impact on the buying process as a whole.

It can affect the total loan amount a lender is willing to offer. The maximum amount is usually 80-97% of the home’s appraisal value. Therefore, the final figure will have an effect on how much a lender is able to provide. A lower appraisal value may mean that a lender reduces the amount to come in line with the figure.

Solutions to a Low Appraisal

Nobody wants a low appraisal figure since it can make the entire process complicated or, in some cases, even unmanageable. Some contracts can include details that require the property to be valued at the sales price.

You can try to bump the sales price down, but the success of this will depend on how much the seller is prepared to negotiate. Additionally, you can increase the downpayment to cover the difference. The appraisal value can also be disputed. Be sure to read the report to check the specific comparables. An experienced real estate agent in the area can help you to better understand whether the figures were used correctly.

Overall, the appraisal process is key to home buyers, and now you will understand how it works. If you get a lower appraisal value than expected, it is not the end of the world. However, in this situation, an experienced real estate team will help you make the best decision.

Ready to buy your dream houseinBoise, Idaho? Let First Service Group Real Estate and Property Management help you find the perfect home. You can reach out to Chris Todd at 208.343.9393 and Chris(at)FirstServiceGroup(dotted)com.