There are different steps involved in buying a home. The the home buying process will not be complete, for instance, if there is no real estate appraisal done. A lot of home buyers are not familiar with the process of real estate appraisal. Usually, people assume that their purpose is just like that of house inspections. Getting a low estimate, for some people, even equates to a bad real estate deal. Before getting any type of real estate appraisal services, you should know the basics of the process. By finding out in advance, you will be more prepared to take on this crucial process of buying a home. Here is a guide to real estate appraisals that you can click here to find out more.
Being approved of your house loan greatly depends on the outcome of the real estate appraisal process. You can simply expect no loan to be approved when there is no real estate appraisal done. Knowing that not all home buyers can afford the total amount of a home they want to buy, they will need to get an appraisal before they can get their house loan. By skipping the appraisal process, you are clearly not able to get an approval for your house loan. Real estate appraisals are done to determine the current market value of a property. The sales price should then be determined based on the market value of the home.
Real estate appraisals are done to primarily protect the lender. Lenders do not want to become victims in buying a home that is not valued. This is why real estate appraisal should always come first before any house loan is authorized by the financial institution. The lender pays close attention to the information provided by the home appraiser. The lender will only make a final mortgage decision once they have considered every detail made in the real estate appraisal. If they must finance the house that the borrower is planning to buy, they should know what its current market value is.
Most of the time, it is the lender who gets to decide which home appraiser they should hire for the job. If they are staffed with a home appraiser, they can choose to hire them or if not, they can get the services of an individual contractor. When you prefer to get your choice of real estate appraisal services, the lender still confirms the finality of such a decision.
Generally, home appraisers take on either a cost approach or a sales comparison approach in appraising residential homes. When a home appraiser compares your house with other houses similar to it in the neighborhood that have already been sold in the market, this process is called the sales comparison approach. Meanwhile, the use of the cost approach means evaluating the costs that made building the property possible. This approach is most common for new homes.