If you, like most people, are obtaining a loan to pay for it when buying your New Orleans home, they will require an appraisal to determine the home’s worth. How does the appraisal determine the value of your home – find out now!
What is an appraisal?
An appraisal is the opinion of an appraiser on your home’s worth based on comparable sales in the area, location, condition, and other varying factors.
How does the appraiser decide the value?
The appraiser will measure the house, check the property condition, possibly look at the attic (for FHA & VA loans), and note any extra features that would add value. After that, they compare your house to comparable properties sold in the neighborhood. Value is reduced and added based on what the other properties sold for and their amenities.
My friend’s house sold for $50k more last year!
Appraisers typically only look through your neighborhood’s last six months of sales. They will look back at older sales if your neighborhood doesn’t have much activity or your property is extremely unique.
Can I ask the appraiser to change something?
Not really. You can dispute the appraisal, though. Maybe they missed a property that would be an excellent comparable to yours. Your agent can reach out and offer them that info to help change the appraisal, but it’s not always successful.
My house is worth more because of the stainless steel appliances!
Wellllll…… that’s not how it works. Your purchase agreement says those appliances you’re leaving for the buyer don’t add any value to the house.
[IMPORTANT READING: How to Determine Your Home’s Worth]
What happens if the appraisal is lower than the purchase amount and the appraiser won’t change the value?
That’s when you present the appraisal to the sellers and ask them to come down on their price. If they do not agree to a price drop, you can leave the deal and get your deposit back.
What if the appraisal comes in for more than what I’m buying it for?
AWESOME! You now have equity in your home!
Can I pick who the appraiser is?
Nope. The bank doesn’t even pick who goes out to evaluate the home. They put in a request and it’s a round-robin system. They want appraisers to be impartial.
Be mindful that the appraiser has a copy of your contract and knows how much you’ve agreed to pay on this home. Low appraisals are not the norm. Let your experienced New Orleans real estate agent guide you if this happens!
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