How Much Does a Home Appraisal Cost?
For a home buyer purchasing a home in a specific area a home appraisal is important so that the lender will give you a loan for the mortgage amount. If the homebuyer is borrowing more then the home is worth, then the lender will not give the loan. Other reasons a home appraisal may cost money:
1. There is not enough time to complete the necessary work to get a "B" average of the home or the area.
2. The appraiser is not comfortable with all the work they have to do to get a true "B" average.
3. The area appraisal does not have enough information to include comps. The competitor's sales will not give you an "A" average. This is a quality issue to address. If there is another primary residence to compare it to, then that comparison should give a "B" average, not an "A" average. The comparable sales should been in the same neighborhood or as close to the subject as possible.
4. The price homes are being appraised for are much less than the home will sell for.
5. The appraiser wants more commission before they will complete the work.
6. The appraiser "is doing the right thing" by gaining an idea of the subject property's value, but it gives them a commission, and if the seller objects and they have more to gain and they resist putting any money into the appraisal, the buyer can just claim to a loss protection against the commission loss from the seller in any conceivable circumstance. This is a severely dangerous situation since in a "normal" transaction all the three parties will know precisely how much they issued then seller still has the means of moving on without the loss of any speedy or substantial gain, and the housing market goes on a higher swinging swing from that point on, affecting all the houses included in the comparison. Simply move on. The new appraisal will cost you around it the actual appraisal so that the new lender has your appraisal to use for their opinion.
For instance, consider the $20,000 house selling for $150,000, and a 5% to 6% loan will cost the "home buyer" $15,000. The home seller will receive $50,000. This is a $15,000 net profit after closing costs. In order for the home buyer to receive $15,000 as a gift the home buyer must meet the lender's loan requirements and prove the buyer's ability to repay. The house seller has nothing to gain less the $15,000 appraised value.
The other situation that works for a buyer purchasing a home in a specific area is that the house may or may not be priced at cap rates in the area. Cap rates are exactly that, the going "asking" price that the area has been proven ready and willing to sell for in a reasonable time. The seller may have priced their home very much to get an offer and they may be stuck with a "net" price that is lower then anyone will pay. In order to know precisely what the "right" price is, a comparable sales/comparables (comps) analysis is requested to find an "appraised value" that has been established. This is a way for a buyer to feel somewhat more precise about what they are purchasing. Depending on where the home is located, what homes similar to yours have sold for recently is taken into account. By determining a good average, a homebuyer can then feel confident about what they are paying for the property.
Once a home is found, depending on current fees, a preapproval letter can be provided to expedite the process and, for a fee, set off a virtual tour of the home.
After all the necessary negotiations and a qualifying report, the buyer will need to provide proof of funding to secure the loan. A letter providing a proof of funds will be required by all parties.
Upon approval of the loan, the entire, remaining funds will be sent to the escrow company responsible for the closing to be put in an interest bearing escrow account.
The escrow company will then send a letter to all the necessary parties stating the only outstanding items necessary to close the transaction will be the original money deposited at the escrow company, and a Certificate of Insurance which will confirm that the insurance policy is current.
The buyer pays a home inspection fee for an inspection of the home. All the home inspectors must be approved properly by either the real estate agency making the inspection, or by the lender (if there is no newer individual carrying out the home inspection), depending on the state where the house is located.
