Comparable sales are recently sold homes of similar location, size, age, condition and features in the same area as the home you are buying or selling. Comps are used as a baseline for property value and must be as near to identical as possible to the home being bought or sold, to ensure an accurate appraisal.
An appraiser is not a home inspector , and therefore, does not comment on the integrity of the foundation, roof systems or mechanical systems, and does not check for moisture issues or potential environmental concerns. An appraiser is responsible for observing and documenting any positive or negative site influences. This can include lot shape, lot topography, positive views such as water, mountains, or valleys and negative views such as powerlines, industrial facilities or cemetery, or traffic noise, often referred to as traffic pollution.
In addition to the immediate exterior, the appraiser observes whether the house is situated in an urban, suburban or rural area and the type of neighbourhood. Home improvements are described in terms of their age, the extent of the work, room allocation, quality of construction and the current condition. An experienced appraiser can differentiate the varying quality of work and will comment on the construction, calling it fair, average, good, or custom.
The appraiser will document the type and quality of finishings and improvements such as flooring, windows, mechanical work, cabinets and countertops. It is important the appraiser appropriately categorize the improvements so he or she can accurately compare the subject property to the recent comparable sales and ensure the final estimate of value is accurate and well supported.
For a complete checklist of these and other appraisal requirements, refer to HUD Handbook Though similar to the conventional loan appraisal process, there are a few differences when it comes to the government-backed VA home loan. The VA will assign the appraiser your lender does not select the appraiser.
If the lender does not have an SAR, the appraisal must be sent directly to the VA for review before the loan can move forward. The purpose of the review is to ensure the value is fair and the property meets lender and VA guidelines. Once the lender receives the appraisal report, the Staff Appraisal Reviewer is generally expected to issue the Notice of Value NOV within five business days.
The NOV provides final home value and also records any necessary repairs. These repairs will need to be completed before the loan can close. Sometimes they are minor repairs that will bring the home up to VA guidelines. Other times it is something as simple as a termite inspection that was not yet completed. Usually, the home buyer pays for the appraisal or the homeowner in the case of a mortgage refinance. Just ask the seller to match the appraisal price. If the home was overpriced or the value was inflated, this is often the best solution.
This can be troublesome for your mortgage refinance because a low appraisal can mean a higher loan to value LTV , which can affect your interest rate. You may be able to dispute the appraisal. After all, it is a subjective figure meaning it could have been incorrectly calculated.
Instead, you can work with your lender to present facts that may have been overlooked or omitted by the original home appraisal. Many purchase contracts contain a loan contingency if the appraisal comes in low. A properly written loan contingency allows the buyer to cancel the contract and requires the seller to release the buyer's earnest money deposit.
At the end of the day, the most important point is that you have the ability to help increase appraisal results by maximizing your home value. Major components big-ticket items such as a new roof or air-conditioning system also carry weight, especially for older homes.
And we just put a new roof in last year, and it was this much money. Petersburg, Fla. Appraisers look at the size, shape and topography of the lot, including easements and encroachments. The appraiser will also note amenities such as street utilities and vehicular access. According to Bethany White , a top Virginia Beach agent with over 13 years experience, FHA appraisal requirements tend to be stricter than conventional loan appraisals.
But unlike an appraisal for a conventional loan, FHA appraisers also evaluate the property for health and safety compliance. The following are some of the FHA appraisal requirements that need to be met before closing:.
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