An appraisal is essential when buying or selling a home in Albuquerque. An appraisal is required when you are buying a house, refinancing your current loan, or selling your house to anyone other than a cash buyer.
During an appraisal, experts give their unbiased opinions about the value of a home. The appraiser develops an appraisal report after examining the property, the current state of the market, and nearby comparable sales of similar properties. The borrower usually pays the appraisal fee. If a home appraises for less than expected, the bank may not offer financing. In order to protect their collateral, banks do not want to lend to homeowners who are borrowing too much.
A loan appraisal is used by lenders as a form of protection in case something unfortunate happens to the borrower, such as default.
If you’re a seller and you get a lower appraisal than expected, you may need to lower the price. If you are a buyer, you might have trouble getting financing.
Even so, there are some things you can do if you feel your appraisal is too low.
Get a Copy
When an appraisal threatens to derail a sale, get a copy of it as soon as possible. If you want to challenge the appraisal, you need to know what issues exist. Sellers cannot access appraisals, but buyers can if they have paid for them.
If you receive a copy, check it for errors. Errors can and do occur in appraisals. It could be listed in the wrong neighborhood, the square footage could be incorrect, the number of bathrooms could be wrong, etc.
Are The Comps Up-to-Date?
Comparable properties are a major factor in an appraisal. Comps are houses that may be nearby or have similar square footage. These homes, if they’re included in the appraisal, should also have sold within the past six months or less. It can be grounds for challenging an appraisal if the comps used are not appropriate. Comps might include, for instance, a foreclosure or home that is significantly larger or smaller.
Additionally, there may have been recent sales that could be comparable but were not included.
Were Any Improvements Left Out?
Appraisers are interested in changes made to a house. However, they may miss them. A bedroom or bathroom, for example, may have been added. This can also be an issue if it’s omitted.
How Well Does the Appraiser Know the Area?
To ensure that the appraisal is impartial, your lender cannot select the appraiser. The appraiser may not necessarily be qualified, at least for that area. A good and accurate appraisal depends on knowing the area well.
Unless an appraiser is coming from within 50 miles of the neighborhood, he or she is not likely to be familiar with it. This might be something you can appeal to your lender and get another appraisal done.
In advance of your appraisal, you can look up the individual who will conduct it. Based on your research, you can ask your lender to change the appraiser if you don’t think they’re qualified or they lack the local knowledge you need.
The fact remains that while an appeal is possible, it will not always lead to the outcome you want. Lenders might turn to an appraisal review committee if there’s an issue, and that could result in a downward adjustment.
You may have to find another bank to finance your home if you have difficulty with the appraisal and your lender is not being helpful.
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