Whether selling, refinancing, or buying a home, you should get the house appraised to determine its value. Ask any experienced Ocoee realtor, and they will tell you that a home appraisal allows you to ensure you are not paying more than the market value.
Let’s look at this part of the home-buying process in detail:
What Is a Home Appraisal?
A home appraisal is done by a licensed appraiser, who thoroughly inspects the property to determine its true worth. The value usually differs from the asking price set by the seller. The appraiser compiles their findings and sends you the report so you can proceed based on the information.
If you are applying for a mortgage, the lender usually hires the appraiser to ensure they make a safe investment. Some lenders demand that buyers add a contingency in the agreement, which states that if the Orlando real estate is valued at a lower price and the seller does not agree to bring the price down, the lender will reject the loan application.
The Importance of Home Appraisal
When you apply for a loan, the first thing the lender does before approving the application is get the house appraised. Let’s say the house you want to buy costs $350,000. However, it is appraised at $315,000, leaving you short of $35,000.
Here are two things you can do to make up for the remaining amount:
Pay It from Your Pocket
You can make a bigger down payment to cover the remaining amount. You might have to dip into your savings but look for another house if this exceeds your budget.
Renegotiate with the Seller
Now that you have the documents that prove the house’s market value is lower than the asking price, you can negotiate with the seller. This is often a long shot because the seller probably has other buyers waiting in line.
Factors That Affect the Home Appraisal
- The overall condition of the house
- Location
- Safety features
- Size of the home
- Electrical and plumbing systems
- Nearby Sales (Comps)
- Home updates
- The construction material the house is made of
- Structural damages
- Outdoor and indoor amenities
If you don’t have a contingency, you can demand a Reconsideration of Value (ROV) from the lender. This allows you to get the home appraised again by another certified appraiser. Remember: The average home appraisal fee for homes in Florida is between $325 and $425, which you will pay again for ROV.
First-time homebuyers often confuse the terms home appraisal and home inspection. We have thoroughly explained the former. The latter is also performed by a certified inspector but provides a complete assessment of the house’s condition.
In conclusion, you must reassess your decision if the appraiser quotes a low value. Therefore, adding a contingency clause to the agreement is essential.
To buy Orlando real estate in your desired area, visit the Megan Dowdy Realty website. Talk to an Orlando realtor to schedule house tours. For more information, call 407-509-9279.
