It has finally happened, you have found the home of your dreams, and now it is time to cross all of the T's and cross all of the I's before this dream home becomes yours forever. There are a number of items that should be on the closing checklist for the closing of your home, including the appraisal. So, what exactly is that?
A home appraisal essentially consists of an assessment of the value of the home in terms of the property itself. To determine whether a home is priced appropriately, the agent performs an appraisal that is conducted by a certified third party.
During a home appraisal, the appraiser conducts a complete visual inspection of the interior and exterior of the home. He or she factors in a variety of things, including the home’s floor plan functionality, condition, location, school district, fixtures, lot size, and more. An upward adjustment is generally made if the home has a deck, a view, or a large yard. The appraiser will also compare the home to several similar homes that were sold within the last six months in the area.
Among the information that must be included in the final report are a street map of the property as well as the other properties that have been compared with it, photographs of the interior and exterior, and an explanation of how the square footage has been calculated in addition to market sales figures and public land records, etc.
It is after this process has been completed that the lender looks for additional information about the property to look for evidence that it is worth the amount they are investing in it. This is a safe-guard for the lender as the home acts as collateral for the mortgage. For whatever reason, if the buyer defaults on the mortgage and goes into foreclosure, then the lender is generally obligated to sell the home in order to recover the money lent to the buyer.