So, you have found your dream home and now it’s time to cross all your T’s and dot all your I’s before it’s all your own. You are officially under contract and your Realtor is guiding you to the closing table but there’s a few items that you have to address. One of the first items on your closing checklist is the home appraisal.
So, what exactly is that?
A home appraisal is a value assessment of the home and property. It is conducted by a certified third party and is used to determine whether the home is priced appropriately.
During a home appraisal, the appraiser conducts a complete visual inspection of the interior and exterior of the home. He or she factors in a variety of things. Such as the home’s floor plan functionality, condition, location, school district, fixtures, lot size, and more. Upward adjustments are generally made if the home has a deck, a view, or a large yard. The appraiser also compares several similar homes that have been sold within the last six months in the area.
SO WHAT’S THE DIFFERENCE BETWEEN A CMA AND A APPRAISAL?
A CMA , Comparative Market Analysis is conducted by a real estate agent and a Appraisal is performed by a licensed appraiser on behalf of the bank. A CMA is a tool used to estimate the value of a specific property by evaluating similar ones that have recently sold. When a buyer applies for a home loan, the bank will order an appraisal of the property.
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Your home appraisal report will include a street map showing the property and the ones’ compared. The photos of the interior and exterior will also include explanation on how the square footage was calculated, market sales data, public land records, and more.
Once the report is complete, the lender uses the information found to ensure that the property is worth the amount they are investing. This is a safe-guard for the lender. The home acts as collateral for the mortgage. If the buyer defaults on the mortgage and goes into foreclosure, the lender generally sells the home to recover the money borrowed.
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