Whether you’re buying, refinancing, or selling a home, the appraisal plays an important role in your transaction. Appraisals aren’t required for some refinance loans, but most loans will need one. It’s the official determination of value, so you’ll want it to be accurate. Your lender will order it, and you cannot choose or influence the choice of appraiser.
If you’re selling or refinancing, your goal is to make sure your home is ready for the appraiser and won’t require a final inspection before the loan can close.
An appraisal is not a home inspection.
I know I just mentioned a final inspection, but it’s important to know the difference between a home inspection, an appraisal, and a final inspection as part of the appraisal.
Home inspection:
- Ordered by you, usually with advice from your real estate agent.
- Identifies potential problems with the home.
- Includes reviews of the structure, mechanical systems, roof, windows etc.
- Ordered by your lender.
- Determines the value of the home.
- Relies heavily on comparable sales in the area.
- Includes the overall condition of the home.
- Required when the appraiser finds issues that need correction.
- Adds another step to the loan process.
- May delay the loan closing.
- Areas are inaccessible, such as an attic or crawlspace.
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- Make sure the appraiser can access the complete property.
- Wiring is exposed.
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- Wires must be properly capped.
- Secure outlet covers correctly.
- An outbuilding is unsafe or in disrepair.
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- Yes, something like a shed, barn, garage, or other structure on the property that’s separate from the home is part of the appraisal!
- Windows are broken or inoperable.
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- Make sure the windows open and close and there is no cracked or shattered glass.
- Water stains on the ceiling.
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- This is a red flag, indicating a roof or plumbing leak.
- If you have a leak, fix it.
- Once it’s fixed, repair/repaint damaged areas.
- Rotten wood.
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- Could threaten the entire structure.
- Might indicate a termite infestation or a mold problem.
- Check for rot, especially in decks, window/door frames, and railings.
- Repair, restore, replace.
- Chipped/peeling paint.
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- In older homes, this could raise the specter of lead paint.
- Indicates poor maintenance.
- Repair/repaint as needed.
- Loose/missing handrails on interior and exterior stairs.
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- Repair/replace.
- Inoperable garage door.
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- The garage door is part of the entry/exit to the home.
- The door must function properly.
- Garage door safety sensor not working.
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- Must stop the door from closing on people, vehicles, and pets.
- Missing appliances, other mechanicals.
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- Will affect the value.
- Certain loans, such as FHA, have specific requirements.
- Could be a safety risk if connections are exposed.
- Water or power turned off:
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- Appraiser must be able to confirm the water and power are operating.
- Will require a final inspection with all systems functioning.
Faramarz Moeen-Ziai
CrossCountry Mortgage, LLC
2987 College Ave
Berkeley, CA 94705
Personal NMLS342090 Branch NMLS2020284
Company NMLS3029
