When it comes to buying or selling property, there are many elements to keep track of throughout the process. Among these elements are property appraisals, a crucial step that must be completed before the lender agrees to provide funding. Whether you are looking at purchasing your first home, selling your current home, or refinancing your mortgage, you will need a property appraisal. As a leading provider of innovative lending solutions, the team at PHL Capital Corp knows how important appraisals are for every transaction. That is why we have compiled some information to outline everything you need to know about property appraisals.
Read our tips for first-time home buyers.
An appraisal is a value analysis of your property from a certified or licensed appraiser hired by the mortgage lender during the home purchase or refinancing process. For home purchases, an appraisal will help to ensure that the selling price is an accurate representation of the home’s condition, surrounding location, and neighbourhood. If the value of the home is less than the amount borrowed, then the lender is taking on a large amount of risk and can lose money on the transaction, making them less likely to approve the mortgage. For refinancing, an appraisal is essential for the lender to determine the amount of funds that can be borrowed.
The appraisal typically takes place after the buyer and seller have agreed on a price and an agreement has been signed. After all the details regarding the agreement have been finalized, the lender will send an appraiser to determine the value of the home based on several factors. Alternatively, the seller can choose to get an appraisal done before the buyers approach them through a pre-listing appraisal. In this case, the appraisal is completed before negotiations, removing any unpredictability of a lower appraisal after an agreement has been signed.
Several factors can affect the appraised value of your home. These factors include, but are not limited to:
When discussing home amenities, this refers to the number of bedrooms and bathrooms, the total square footage, quality of fixtures and appliances, and the utilities. Exterior elements such as the condition of the home, the construction type, available parking, and gutters are also considered.
Properties of a similar age and with similar amenities with be used for comparison to determine the value of your home.
The location, available local amenities, access to public transport, proximity to schools, and safety of the neighbourhood all impact the value of your home.