Housing sales in the greater Columbus area have soared by 18.4 percent over the last two years and the average sale price is currently more than $200,000. This dramatic increase in value affects home appraisals, which is good news for both buyers and sellers. Neighborhood sales of comparable homes, known as “comps” in the real estate industry, is a key component used to figure fair market value of a property. The more similar homes sell for, the more the appraisal of the home you are selling or buying will increase.
A home appraisal is an educated estimate of the fair market value of the property. If you’re purchasing a home with something other than all cash, your lender is going to require that the house be appraised, so they can correctly assess the value and thus the risk of the loan. An appraisal also assures the lender that they aren’t giving the borrower more money than the property is worth.
These appraisals are done by a third party, who doesn’t have a vested interest in the sale or a relationship with either the buyer or the seller. For this reason, appraisal companies are generally chosen by the lender. While a real estate agent may recommend a lender, they can’t recommend an appraisal company to prevent any appearance of influencing the appraisal.
A variety of elements go into determining the appraisal figure. The appraiser will look at the house’s features, such as number of bedrooms and bathrooms; its construction, such as whether it’s brick or frame; its age and its square footage. He or she will also look for any repairs that need to be made, especially high-end components, such as the HVAC systems or the roof, and any recent renovations. Lastly, he or she will look at neighborhood features, such as nearby schools or parks and recent sales of similar homes in the neighborhood. This last part of the equation, the recent sales of similar nearby homes, is one of the most important parts of the appraisal.
The appraisal is one of the first steps in the closing process for a house sale. If the appraisal is equal to or greater than the purchase price, the lender is generally satisfied that they are making a safe, low-risk loan. If the appraisal is less than the purchase price, the sale may be delayed because the lender may be nervous that they are lending more money than the property that is guaranteeing their loan is worth. In such cases, either the seller has to drop his price or the buyer has to come up with a larger down payment. Both scenarios reduce the amount of money the lender has to give the home buyer.
In today’s real estate market, where property values are increasing monthly, appraisals are much less likely to fall below the purchase price. This means both buyers and sellers can be confident that the sale will go through the appraisal process smoothly and that the transaction won’t end up costing them more money.
For sellers, higher appraisal values mean that it’s less likely that you will have to lower the sales price of your home to conform with market conditions and to allow the sale to go through. For buyers, a higher appraisal means you don’t have to worry about losing the home you had set your heart on or have to increase your down payment amount at the last minute.
For homeowners who are refinancing their homes, the current market conditions mean that they have more equity in their homes and are more likely to be approved for a new loan at a lower interest rate, saving them on their monthly mortgage payments..
AmeriMac Appraisal Management is a full service appraisal management company. We offer independent appraisals of both residential and commercial properties. We also offer specialized appraisals for things like refinancing, reverse mortgages, litigation support and gifts of real estate. We are happy to do reappraisals where there is some question about the original appraisal. All appraisal reports are subject to a 63-point checklist for compliance and completeness.
Together, our appraisal team has more than 60 years of appraisal experience. We pride ourselves on our excellent customer service. We think it’s our personal attention that sets us apart from other appraisal services in Central Ohio. We are eager to pick up the phone and answer your questions at a moment’s notice, something that’s not typical in the appraisal industry.
To learn more about home appraisals in today’s dynamic real estate market, contact AmeriMac Appraisal Management today. Since they opened their doors in 2014, AmeriMac has been trusted by bankers, mortgage brokers and other lenders to deliver outstanding appraisal reports.