The fine art of accurate real estate appraisals
The fine art of accurate real estate appraisals
Real Estate appraisals can be tricky enterprises. At times, an appraised value can catch you off guard. However, if you’ve done your homework, the appraisal should be in line with what you would expect.
Once you’ve inspected a house, you need to try to figure out what the repairs are going to be. For instance, do you need to paint the inside? The exterior? Do you need to put in a new kitchen? Does the furnace or air conditioning need to be replaced? Once you have a repair estimate, you can send that along to the appraisal company, along with your estimate of what you’d like to sell the house for.
The appraisal company then provides an appraisal based on sales in the area, the type of house involved, and the square footage. In some instances, you might have an after-repair value of say 0,000, while the house might be appraised at 0,000. Or the appraisal company might come back and say the house will only sell for ,000 or ,000. But, by and large, the home buyer should not be surprised at the appraisal amount.
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It’s important to obtain lender title insurance so that, if there’s a problem, the lender is protected. In addition, owner title insurance should be obtained.
The beauty of the system is that, by working with private lenders, when you go to a closing, you walk out with a check. However, you need to review the Housing and Urban Development statement ahead of time so that you can catch errors. For instance, there might be a past due water bill that you weren’t aware of before. Or taxes could be a problem. For example, the taxes on the home might have been paid, but they show up as past due on the HUD statement. If you’ve had a great deal of experience buying houses, you know what to look for on the HUD statements and you can respond accordingly.
In some cases, closing agents have dealt only with institutional lending, not private lending. As a result, they are not well-versed in the procedures that come with private loans. Consequently, you often need to educate the closing agents. Also, there’s often a great deal of turnover with closing agents, so you have to deal with that, too. But, once you become accustomed to the system, everything seems to fall into place. And you’ll find that the home buying process is relatively straightforward.
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