Thursday, February 16, 2012
With every real estate transaction that is funded with a loan, an appraisal is ordered to justify the value. This is to help protect the interests of the Buyer and the Lender. An Appraiser is hired to look at the property and compared it to others that have sold recently in the area. A value is then placed on the property. Once complete, the appraisal is then sent to an Appraisal Management Company to review the appraisal and compare it to the MLS Listing and the County Records.
All parties want an appraisal that is at or above the purchase price. If the value of the appraisal is less than the purchase price, the Lender will not fund the loan. In this case, the appraisal can be challenged if there is an error and the price adjusted. Otherwise, the Seller will need to sell the home for less, the Buyer will need to pay a larger down payment, or the sale fails.
Homeowners who remodel or update their homes significantly without getting the proper local permits may have difficulty selling. The change may cause a red flag for the Appraisal Management Company who may not approve the appraisal. At which point the Homeowner would need to get the updates permitted, or the home would need to be reappraised without the updates. These two options are not ideal. To save time and money it is best to get permits during construction.
Thank you, Craig Walker with Cascade Mortgage for help with this video. Craig may be reached at 206-999-5600 or visit www.cascademc.com/content/cw.