Whether you’re buying or selling a home or refinancing a mortgage, appraisals are crucial. Lenders have gotten serious about basing loans on a home’s value. A return to reality is good news for the housing market.
The bad news? Homes are difficult to appraise in today’s housing market and a too-low appraisal can jeopardize a loan. Neither the buyer nor the seller will be happy if a sale falls through because the lender thinks the property value is inadequate to secure the loan.
What can you do?
* If you’re the seller, read the appraisal carefully to see if any errors undervalued your home. Ask for a re-appraisal if you spot such errors.
* If you’re the buyer, reconsider the deal. Do you really want to pay, say, $300,000 for a house appraised at only $290,000? Ask the seller to bring down the price.
* If you’re trying to refinance your loan, see if all of your home improvements have been included in the appraisal. The new bathroom you just installed and your new kitchen cabinets may have increased the resale value of your home. Again, ask for a re-appraisal if the facts are on your side.
