 | Randy Vickers is the owner of Priority Mortgage Corp of Wichita, which opened in Jan. 1989, is the oldest locally owned mortgage company in Wichita. Randy has been in the real state business since 1983 and is a licensed real estate broker as well as a licensed mortgage broker. Priority Mortgage Corp of Wichita KS Lic #1996-0122. Randy can be reached at 316-721-7700 |
Real Estate
2006-10-01 10:27:00
“I’m happy. Why an appraisal?”
ANSWER: The appraisal is one of the most important parts of the package for the purchase of a new home.
In almost all cases if you are asking for a loan to purchase the new home, the lender is going to require an appraisal. One is not required if you are paying cash, but can be very useful and enlightening. The appraisers do much more than just check the value. They also research availability of shopping, schools, public utilities and competing neighborhoods. The appraiser will review the type, style, age and construction of the property you are buying. They also check for any known environmental situations that may affect the future salability of the property.
These are all things that a lender considers when reviewing your loan application. The main body of an appraisal will be full of information considering the details of your subject home, as well as details of recent sales in the same area or neighborhood. The description and content of the homes will be compared to validate the value you are paying for the subject property. Items such as square footage, basement size and finish, number of garages, number of bedrooms and baths, and any other amenities are used in the property comparison. In a perfect world the appraiser would be able to find the same floor plan with similar finish that sold within the last 6 months to use as a comparable sale. The reality is that the appraiser has to make a judgment as to the properties or comparables that are the closest to your subject home.
The appraiser will also include an estimate of the cost to rebuild the house you are about to purchase. This will include information on
current construction costs in your area to arrive at the cost to replace the home. In some cases with an older home there can be a big difference between current value and the cost to build this home with current construction costs and materials. The difference can be very important when considering your homeowners insurance, as typically a homeowner will want to insure for replacement of the home.
The appraisal is even more valuable when considering a unique or rural property. In these situations it is more difficult to locate comparable properties to validate the value, as they are harder to find in or around the subject property. The appraiser is then required to expand the search and time frame to find the best comparables. In many cases these appraisals take longer to complete and require additional research to be acceptable to the lender.
In almost every case that a purchaser is using borrowed money to buy their home, an appraisal will be required, and it is a good idea even if you are paying cash. In most cases the appraisal will validate the information you used to come up with an acceptable value when you wrote your purchase contract. In some cases the appraiser will disclose information that you as a buyer are not aware of that could be very important in your decision to purchase your new home. More next month...
