Whether you are a home buyer or seller, an appraisal is a key part of the whole process. And in many cases, a real estate valuation, an appraisal, seems to be purely arbitrary and overly complicated.
Fundamentally, though, an appraisal is data-driven: it is simply an opinion about a home’s value derived from similar-housing data and neighborhood data. That’s why you need to stop believing these four home appraisal stories in CA.
1. The Appraiser Works for and is on the Side of the Buyer
When it comes to obtaining a home appraisal, there’s a common misconception that the appraiser works for the buyer. And while this is true in some ways, what many people don’t realize is that the lender who owns the appraised value actually pays for and hires the appraiser. This means that everyone involved in a real estate transaction – including both buyer and seller – should work together to ensure that all information provided to an appraiser is accurate and unbiased.
It’s illegal for anyone involved in a home sale to try and pressure or coerce an appraiser into coming up with a certain value for their appraisal report. So whether you’re looking to buy or sell a home, always remember that the appraiser is working in the best interest of the lender – not you. If you have any questions about how home appraisals work or what you can do to ensure accuracy, be sure to ask your real estate agent or lender. They should be able to provide you with more information and resources on this topic.
2. More Amenities and Bigger House Mean Higher Valuation
Upgrades, improvements, many amenities, and lots of square footage don’t necessarily translate into a higher valuation. A home appraisal just isn’t that simple.
The value of a house is calculated on the basis of sales data for similar homes in the neighborhood. So if a house is more amenity filled and much larger than all others in the neighborhood, then the appraiser won’t have any sales data to work with. In that case, the larger home with all the bells and whistles may not be appraised for what the parties involved think it’s worth. Basically, if surrounding houses (that have been appraised and/or sold) were built on the lot of the house in question, that’s what would be used to determine its appraised value.
3. An Appraisal Equals a Home Inspection
Another appraisal story floating around out there is that a home inspection is the same thing as a home appraisal and vice versa. Although both inspectors and appraisers inspect a property to determine its condition, the similarities end there. It’s true they are both safeguards for the buyer and lender, but they have different purposes.
An inspector’s job, primarily, is to detect any and all problems (and even potential problems) with a home. An appraiser’s job, on the other hand, is to determine the objective market value of the same house. Of course, an appraiser will, just like an inspector, note the condition of wiring, plumbing, roof, and so on, but only as a means to arrive at a valuation for the lender.
4. There’s Nothing You Can Do About a Low Home Appraisal in CA
Also, if you are a seller and the home appraisal comes in much lower than you think it should, you do have recourse. Bear in mind that mistakes do happen – mistakes that can severely jeopardize a potential deal.
In such a case, the homeowner, the seller, can – and should – contact the buyer’s lender and request another appraisal. Before you ever reach that stage, though, you should, according to real estate experts, get an appraisal of your own done before the lender’s appraisal takes place. Keep in mind, too, that federal law stipulates that a copy of the appraisal must be supplied to consumers who submit a written request.