The Scoop on Mortgage Appraisals

Dated: September 6 2021

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The Scoop on Mortgage Appraisals

If you’re like most people buying a home in Vero Beach, you know that your lender will require an appraisal before it’ll agree to give you the cash to buy the house. But what is an appraisal, and why does it matter? This guide explains.

The Scoop on Mortgage Appraisals

A mortgage appraisal is a determination of a home’s value, and lenders require it so that they don’t give a borrower more money than they need to. Essentially, it’s the bank asking a professional, “Is this home really worth what this person wants to pay for it?”

A professional appraiser will evaluate the home to give the lender an answer. The appraiser will look at a lot of variables, including:

  • The home’s size
  • Location
  • Number of rooms (including number of bedrooms and bathrooms)
  • Whether the house has upgraded amenities
  • What type of flooring, countertops and finishes the home has
  • The condition of the home’s systems
  • Number of windows and their locations
  • Number of closets and their sizes
  • Possible hazards and safety issues
  • Whether the home is currently in livable condition

The appraiser takes that evaluation and compares it to other, very similar homes nearby. They’re looking at homes that recently sold to see what buyers have recently been paying (because after all, a home is only worth what a buyer is willing to pay for it).

After the appraiser finishes their comparison, they create a final report. They send the report to the lender, along with photographs of the home, in-depth explanations of how they calculated value, and other relevant information (like sales data or tax records they used during the evaluation).

If the lender determines that the home’s appraised value is higher than what you want to pay for it, it’ll lend you the money to buy the house (as long as you meet all the other qualification criteria). If the house is valued lower than what you want to pay, you may need to negotiate with the seller to reduce the price, come up with the additional money on your own, or ask for a new appraisal. 

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Chip Boyer

Chip is the IT Manager for Alex MacWilliam Real Estate. He handles the technology needs of the company as well as helping agents in their day to day problem solving.....

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