Category Archives: property appraisals

Preparing for a House Appraisal

How to Get a Home Ready for an Appraisal

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

 

Cleaning and Organizing

While these may not be the most desirable tasks, cleaning, organizing and removing clutter from your house are among the best ways to prepare for an appraisal. A clean home looks well-maintained – something the appraiser will be looking for. Organizing the garage, closets and cupboards helps them appear larger, which is a great way to add value. Finally, removing excess clutter from your house, such as items on counter tops, makes a room appear both larger and cleaner.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

Curb Appeal

Check out how your home stacks up against those that have recently sold in the area insofar as its exterior appeal, also known as curb appeal. The outside of your house makes a first impression on the appraiser, so make it is as clean and de-cluttered as the interior. Tidy up the landscaping and spread some fresh mulch in the landscape beds. Remove any toys or other clutter from the front yard. A well-maintained yard gives the impression of a well-maintained home.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

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Make Necessary Updates

Fresh paint is an easy and inexpensive way to add value to your house. This is especially necessary if you have wild or unusual wall colors, advises Loreen Stuhr, an appraiser with Appraisers of Las Vegas. She recommends painting the walls in neutral colors and replacing vinyl flooring with wood, laminate or tile. If it’s in your budget to do so, consider replacing laminate counter tops with tile, granite or other more upscale materials.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

Repairs

Fix any maintenance issues that the appraiser is sure to notice, such as leaking or dripping faucets, running toilets, torn screens, missing trim and missing or wobbly stairway handrails. If the home buyer is using a loan backed by the Federal Housing Administration (FHA) to purchase the house, keep in mind that FHA requires that the seller repair anything that affects the health and safety of the occupants. An FHA-approved appraiser is required to make note of such property conditions, including an assumption of the structural integrity of the property. Items that require repair before the close of escrow include providing adequate access and exit from the bedrooms to outside the home, leaky roofs, foundation damage and flaking lead paint.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

Paperwork

Although the appraiser has numerous ways of finding information, she may have no way to know about improvements you’ve made to the home, which could have a positive impact on its value. A good way to let her know is to create a list of the home’s features and benefits, advises David Hesidenz of David Hesidenz Appraisals in Pennsylvania. Hesidenz suggests that you supply the appraiser with a page or two containing the exact street address of your home, the number of bedrooms and bathrooms and the square footage and lot size. Then make a list of any improvements you’ve made to the home and the date they were finished. Some of these improvements may include a new roof, new windows, upgraded plumbing or electrical work, and room additions.

Source: PocketSense.com – Bridget Kelly

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Closing costs more than homebuyers often expect

Some buyers may not consider the extra costs of a home beyond its purchase price.

November is national Financial Literacy Month. The goal is to protect and educate consumers about financial services and this year’s theme is Financial Literacy Across Generations. This is the third in a series of Ask Joe columns that will touch on real estate decisions buyers and sellers face at different times in their life.

 

I’m buying my first home. What are some of the costs I should plan for, besides the purchase price?

Chances are you’ll have run the numbers to determine what you can afford by way of mortgage amount and payments. But

Some first-time homebuyers may overlook the fact that the price paid for a home is just one of its many costs. That’s why it’s so important to understand the full cost of buying a property.

It’s useful to separate the additional expenses into three categories: pre-closing costs, closing costs and after-closing costs.

A home inspection is the most widely recognized pre-closing cost. It may be seen as an optional expense but it’s also a smart one is because a qualified home inspector, engineer or contractor can identify underlying problems with a home’s major systems, like heating and electrical. If you’re thinking of saving some money by skipping an inspection, ask yourself, “Can I afford to learn about major, costly problems after I take possession?” If you’re buying in a rural area, you should also have the septic system inspected and water testing conducted for the good of your health.

 

Your lender may require, as a condition of financing, that you pay for an appraisal or survey of the property to ensure the home’s value matches its sale price.

Closing costs typically make up the bulk of the additional expenses. In Ontario, a land transfer tax is up to 2 per cent of the purchase price. In Toronto, an additional tax of up to 2 per cent applies. As a first-time buyer, you should talk with your real estate agent about whether you are eligible for a refund of the land transfer tax.

Legal fees will need to be paid to handle the documents and contracts involved in the purchase of a home. Your lawyer will conduct a title search on the home to ensure the seller can actually sell the property and that there are no liens against it. They will also register the deed and mortgage for you.

 

You may also need to refund the seller for pre-paid expenses — property taxes, maintenance fees, utilities, hot water heater rental fees.

 

Three different insurance policies round out the closing expenses. You’ll need mortgage insurance if your down payment is less than 20 per cent of the sale price. You’ll need home insurance. And title insurance will protect you against title fraud, errors in surveys and encroachment issues with neighbours.

 

After-closing costs include moving expenses. Some gas, hydro and water companies charge a hook-up fee and you’ll need to pay if you want to forward your mail from your old address.

 

Then you’ll need to factor in what you want to do with the dated kitchen and broken fence. If you want to renovate or take care of some repairs identified during the home inspection, it will add to your costs. A fresh coat of paint, some window coverings, or perhaps a shiny new fridge and stove also add up. Understanding the full cost of buying a home will help to budget for these final touches. The latest edition of RECO’s consumer newsletter, RECOnnect, has a useful overview of these costs. You can find it on the consumer side of RECO’s website, reco.on.ca, under ‘Publications and Resources’.

Source:  Special to the Star, Published on Fri Nov 15 2013
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Bidding war homebuyer beware: Appraisers may not be as eager

Hamilton's real estate market remains hot in August.

Appraisals come in lower than buyers’ offers in Hamilton’s hot housing market

By Kelly Bennett, CBC News Posted: Aug 24, 2014 6:00 AM ET Last Updated: Aug 24, 2014 6:00 AM ET

Competitive homebuyers in Hamilton’s hot housing market are often facing a critical disagreement as they try to buy a house – the property appraiser doesn’t share their opinion about how much the house is worth.

And that can leave homebuyers without the financing they need to close the deal.

The tension, between eager buyers and sellers and often conservative appraisers and bankers, is arising more in the hot market, local real estate experts said. ​

Lately, some homes for sale have been attracting “five, six, seven” offers, said veteran local appraiser Bob Schinkel, who owns Schinkel Appraisals, a local firm. The winners may be blinded by their victory.

“There’s a good chance that they’re so excited about getting the house that they’re willing to pay more than market value,” he said.

‘Things like this can set a crux in the deal’

The appraisal is typically the most the mortgage bank will allow a buyer to borrow on the house. If they couldn’t pay their bills tomorrow, and the bank had to foreclose, the bank wants to know it could sell the house to cover the debt.

So when the appraisal comes in under what the buyers have agreed to pay, they may have to scrounge up thousands of dollars more for their down payment, or back out of the deal entirely.

Here’s, roughly, how it works. For the sake of round numbers, say a house is on the market for $200,000. A buyer finds out she has approval from the bank to get a mortgage for $160,000, so she offers $200,000 on the house, planning to pay a $40,000 down payment.

But before agreeing to the deal, the bank hires an appraiser to go take a look at the property, to analyze the house and to compare it to other houses in the same neighbourhood of similar size and quality. The appraiser’s report goes back to the bank, along with a price he thinks it’s worth. If that price is less than the $160,000, the bank will most likely only grant a mortgage for that amount, even though the buyer was approved to borrow more.

“They’re hoping to get 80 percent financing but the bank will only lend on the lower of the two, the purchase price or the appraisal,” said Bill Boros, a residential appraiser at Pocrnic Realty Advisors.

The roadblock is popping up more in an escalating market, said Suzanne Boyce, a local mortgage broker who owns the Personal Mortgage Group.

She said it’s important for buyers to make sure they’ve completed their full application for a mortgage before making an offer, not just submitted initial pre-approval paperwork.

“It’s something that the public should know about when they’re purchasing,” she said. “Things like this can set a crux in the deal.”

Sometimes buyers try to increase their competitiveness by making their offer “firm.” But if they’ve gone into the offer without making it conditional on their loan coming through, they could be in trouble – facing a “lawsuit or loss of their deposit or both,” Schinkel said.

‘You always feel that pressure’

The situation underscores a few characteristics of Hamilton’s housing market.

There aren’t a lot of homes on the market, and the low supply increases demand. More homes sold in July than any July for the last 10 years, according to the Realtors Association of Hamilton and Burlington. But the inventory of homes for sale at the end of the month was 8.4 percent lower than the same month last year.

The fever inspires some homebuyers to seek out charming homes, sometimes fixer-uppers, in previously less popular neighborhoods. But appraisers may not be able to find supporting sales of similar diamonds in the rough nearby to support their estimate of the home’s worth.

The market is seeing an influx of buyers from elsewhere, like Toronto, who are surprised to see such “low” prices compared to their previous cities and may not balk as prices rise in a bidding war.

Realtor April Almeida with City Brokerage had an experience recently where an appraisal came in several thousand dollars lower than a client’s offer.

“They can walk away or they have to basically come up with the difference,” Almeida said.

Almeida’s client ended up switching to a mortgage broker instead of taking a loan from the client’s bank. But Almeida said the hiccup was frustrating.

“We’re seeing more of it here, and it’s making me nervous that [appraisers are] trying to quash this market,” she said. “Or are they giving into this perception of this bubble thing.”

The client ended up switching banks and finding a new loan through a mortgage broker.

Boros said appraisers know their estimates may disappoint some people, but he said his duty is to the lender, not to the buyer.

“You always feel that pressure,” he said. “People are trying to buy a house. It’s a matter of explaining to them: We have to base it on the market.”