Are you in the market of selling your home? Are you curious to know more about what hurts a home appraisal? Did you know that the average price of your home greatly depends on its location?

For example, the median price for an average home in Ohio is $150,000, whereas a similar home in California may go for $500,000? It is imperative that you educate yourself on the other factors that may help or hurt your home appraisal.

If you are looking for more information on what hurts a home appraisal, you came to the right place! This article will briefly go over important information you need to know about home appraisals and who you can contact for more details.

What Is a Home Appraisal?

A home appraisal is a process where a third-party appraiser comes to review your home. They will then compare your home to other homes in the area to give you the market value of your property.

There are a couple of reasons why you may need your house appraised. One reason could be that you are looking to refinance your home and your lender needs to appraise the home’s value.

Another primary reason your home needs an appraisal is that someone’s mortgage lender requested them to appraise the house before releasing the loan. It is essential to know that if the appraisal is for a home sale, neither the future homebuyer nor the current homeowner cannot be there for the inspection.

Why Is an Appraisal Necessary?

A home lender can only lend up to the appraised value amount to ensure that the homebuyer and the lender only pay what is fair. This inspection also helps to ensure that the home lender won’t encounter a total loss if the new homeowner defaults on their loan.

What Is a Low Appraisal?

A low appraisal could potentially derail your home refinance or home sale. If the appraisal is lower than expected, the home buyer may not be able to borrow the money they need to cover the price of the home. The homebuyer will most likely need to pay the difference out of pocket.

If they cannot pay out of pocket, they have the option to try to renegotiate with the seller. If you are looking to refinance your home, it is essential to know that a low appraisal could mean there is insufficient equity to borrow against the loan.

What Is a High Appraisal?

A high appraisal allows a homebuyer to borrow the money they need to purchase the home. This appraisal also increases the home’s equity, which could also help remove the homeowner’s private mortgage insurance.

Although you have the option to borrow more money with a higher appraisal, it doesn’t mean that you should. There is a risk that you could over-borrow on your loan, which could cause you to have an upside-down mortgage easily.

Who Does the Appraiser Work For?

Most people believe that the appraiser works for the lender, but that is not true. A lender may request an appraisal, but a third-party person always completes these appraisals.

It is crucial to ensure that your appraiser has the necessary licensing and certifications to complete the job. This will ensure that the appraisal process goes smoothly without any bias.

It is important to know that if someone has an approval letter from an FHA lender, USDA lender, or VA lender, the appraisal process is different. These loans are government-backed loans that require a home to meet specific guidelines set by these government agencies.

Who Pays for an Appraisal?

When you have someone interested in buying a home, they usually have to front the bill for the appraisal. The appraisal is typically factored into the closing costs of the loan. The cost of the appraisal depends on the location of the home and the type of property it is.

Home Appraisal Tips

When an appraiser comes to look at a property, they will consider many different factors. For example, an appraiser will determine the home value by looking into the property’s location, condition, renovations, and square footage. They will also look into any recent sales of the homes within the same neighborhood.

Key Factors Appraiser’s Look For

As mentioned earlier, the appraiser will look into the location of the property. The appraiser takes into consideration the quality of the local school district and the employment opportunities nearby.

If your home’s location is near a flood zone or has the potential to be impacted by any other natural disaster, the appraiser will consider that as well. Any nearby entertainment, such as movie theatres or restaurant types, also affects the value of your property.

Size of the Lot

Square footage plays a significant factor in your home’s value. The inspector will look to see if there is any space to expand and if you have a backyard.

Access to Utilities

Your home must have the necessary hookups to public utilities. This includes any water or sewage connections. This is a huge sanitary concern that many inspectors want to make sure is up to date. Having access to public utilities is especially important if you sell a home to someone with an FHA, USDA, or VA loan.

The Age of Your Property

The age of the property you want to sell can significantly affect the appraisal. The older the property, the more likely there will be maintenance issues or other structural problems. If this is the case, the appraiser will include that in their report when they determine your home’s value.

What Hurts a Home Appraisal?

There may be a few things out of your control that may negatively impact your home appraisal. For example, you cannot control the sale prices of other homes in your area. It is crucial to stay on top of the market conditions in your local neighborhood, so you aren’t as surprised if your home value is less than you expected.

Rural and Unique Homes

If you live in a unique or rural home, there is not much you can do to change that fact. The problem with these types of homes is that there are not many other homes to compare your property with. It is difficult to assign a specific value because there are a lot fewer homes in rural areas.

A unique home is a home that may have been custom-made. For example, someone may have used their architect to design the home with special features and add-ins.

A house customized to that degree can be a challenge for most inspectors because there are no other homes like that one. To compensate for this challenge, most appraisers will likely create a range instead of an exact number.

They will look into competitive neighborhoods to try to find a similar value. The challenges imposed by unique and rural homes may cause your home to be undervalued.

Structural Materials

Just like technology advances over the years, so do construction methods. Many builders have found better technology, materials, and techniques to make a home more energy-efficient, stronger, and safer. These new methods help to increase the value of the house.

There are some materials that older homes possess that can pose a health threat to the inhabitants. For example, some older homes have lead paint, asbestos tiles, and outdated insulation. Even if dated materials in the house pass inspection, they may not be as energy-efficient as other types of materials.

Old windows, doors, and roofs can prove to be very pricey to repair or replace. If they need changing, this can drive down the value of the property.

Outdated Appliances and Systems

Updating vital appliances or systems such as electrical or plumbing systems can drive up costs, especially if your systems are outdated. It is also important to note that if the home’s interior still has the original design of when the original owner initially built the house, many homebuyers today may want to change it up before purchasing the property.

If a property contains any outdated features, this can also signal that there are other underlying issues. This also may indicate that the homeowner did not properly take care of the home.

How to Prevent a Low Appraisal

There are many ways that you can try to prevent a low appraisal, such as doing your research on the local market conditions and the prices of homes that sold nearby. You also may want to do a few upgrades to the house to make it more appealing to what home buyers are looking for.

If you decide to do any updates, ensure that you keep proof of these repairs and updates to show the inspector. You also have the option to improve the curb appeal of your home. The home’s first impression can say a lot to an inspector, so it is best to have your home looking as best as possible.

If you notice that doing all of these updates and repairs interferes with your own personal funds, there are other options. You have the opportunity to sell your home to an iBuyer. The iBuyer will handle all of the listed tasks above on your behalf.

What Is an iBuyer?

An iBuyer is a company that uses unique technology to make you an instant offer on your home. They use a collection of data of your market area to create a competitive bid without you needing to update or change anything on your own. Many homeowners who want to sell their homes prefer to use an iBuyer because of the simplicity of their home purchase process.

Why Use an iBuyer?

As mentioned earlier, iBuyers take ownership of the home selling process on your behalf. This process includes any owning, marketing, and reselling of your property. The iBuyer process allows you to control when you want to close and move out of the property.

iBuyer Home Buying Process

The process varies based on who you choose to sell your home to, but the overall goal is the same. It is vital that you ask any questions about this process to your iBuyer to make sure that you understand what is going on.

Step One: Request an Offer

Once you have found an iBuyer that you want to work with, you must request an offer. The process to request an offer is free, and there are no obligations on your end to accept what they quote you.

You will need to provide the iBuyer with the property’s address and insert some of your contact information during this step. If your property meets the criteria, you can expect an all-cash offer on your home within two business days.

Step Two: Review Your Offer

Depending on who you decide to partner with, you will have about five days to consider the offer. The offer letter includes any closing costs or transaction fees associated with the home sale.

It will also state what your net proceeds will be after the entire process closes. There are no hidden fees or costs. You will know everything upfront. If something changes, your iBuyer will let you know as soon as possible.

Step Three: Accept the Offer

Once you accept the offer, you will need to schedule an appraisal. The iBuyer will send a representative to check out the property to make sure all the information matches what you put on the application.

If any necessary repairs are needed, they will reach out to you and make sure that it is okay to come to said repairs. You do not need to pay for these repairs. The repair costs will be deducted from your offer letter. The iBuyer will handle the repairs after you move from the house.

Step Four: Choose Your Closing Date

Once you and the iBuyer agree upon the repairs, you get to select your closing day. You have the option to move out between fourteen to sixty days after you agree on the offer. After you close on the deal, you receive payment within a few days.

Accept Your All-Cash Offer Today!

Now that you know more about what hurts a home appraisal, let’s show you how to get the best appraisal possible. Using an iBuyer who has access to cutting-edge technology to give you the best offer on the market is the most innovative way to go.

The post What Hurts a Home Appraisal? Everything You Need to Know appeared first on iBuyer Blog.

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It’s still a seller’s market, low inventory is still causing elevated prices and bidding wars. What lies ahead? 

A lack of inventory is pervasive across the housing market statewide. “We got our hopes up for inventory, but except for a few months that didn’t happen,” said Florida Realtors® Chief Economist Brad O’Connor, Ph.D., at the 2022 Florida Real Estate Trends summit in Orlando last month. “We started the year with a 1.6-month’s supply of existing single-family homes, but we ended 2021 with a 1-month’s supply; and in many of your local markets, it’s down to a half-a-month’s supply. 

For years, Florida has had more existing condos than single-family homes, but by the end of the year, existing condos and townhomes are down to a 1.3-month’s supply, which is very close to the single-family category.”

Property valuations should climb even higher in 2022, as inventory continues to wane. Here’s a look at some of the state’s top markets.

Tampa Bay is No. 1

Tampa Bay is the hottest real estate market out of the 50 largest metro areas in the nation, according to Zillow. It’s also the No. 1 market in the state. “Homes go here as quickly as they hit the market,” said Rae Anna Conforti, sales associate with RE/MAX Alliance Group, whose farm area includes all of Tampa Bay, St. Petersburg and Clearwater. 

“The lower the price point, the more offers we are getting. But it’s the same across the board—from $350,000 to million-dollar homes. More people want homes than we have inventory. I’ve been in the business for 20 years and I feel like inventory is at the lowest point that it’s ever been. Sellers have complete control right now, which is sad for buyers and extremely frustrating.”

Home values are expected to rise 24.6 percent in 2022, thanks to Tampa’s strong job market, high demand for housing, an ever increasing population of home buyers and steady home value growth.

“We’ve gotten a lot of press recently with our sports teams all doing well, so I think that is creating even more of a desire for people to want to come down here and see what it’s all l about,” Conforti said. “People don’t necessarily have the luxury of picking the location like they used to. Now it’s which house is available. Some neighborhoods have no homes for sale.”

Buyer fatigue is also beginning to take hold. “Buyers are tired of submitting offers and getting rejected,” Conforti said. “Interest rates are going up eventually and that may prompt some sellers who have been holding off to put their home on the market.”

There is fierce competition in new-home construction too. “What I’m being told by builders is they only have so many permits that they can build and there are waiting lists for people to buy,” said Conforti. “Some builders are going back to buyers on their waiting lists and asking for their highest and best offers. They are creating their own bidding wars. I never saw builders do that before; it’s crazy.”

Northeast Florida: A Hidden Gem

Jacksonville, once largely overlooked by people moving to Florida, is now trailing right behind Tampa as the second hottest real estate market in the nation. “Jacksonville is also the No. 2 market in the state,” said Geoffrey Blum, sales associate with Keller Williams Realty Atlantic Partners in Jacksonville Beach. “It’s a great place to live—and still affordable compared to the rest of the state. But it has been behind the eight ball for 50 years because people cruising down Interstate 95 look at the sign that says, ‘Welcome to Florida’ and they’re excited to get to Orlando and the attractions or on to Fort Lauderdale for spring break.”

In December 2021, the median sales price of $350,000 was up 22% from the year before. Inventory dropped 22.7% to 1.1-month’s supply [Source: Northeast Florida Association of REALTORS®]

What’s driving the influx of buyers? “We have a lot of good things going for us,” Blum said. “We have the ocean, a major port, the St. Johns River, an NFL football team, the global headquarters for the PGA Tour in Ponte Vedra Beach, and of course St. Augustine is in our backyard.”  

The area is also home to Naval Air Station Jacksonville, Association of Tennis Professionals, CSX, and business data titan Dun & Bradstreet among others. And, according to Bloomberg and LinkedIn, Jacksonville ranks ahead of Seattle and San Francisco as a preferred destination for tech workers.

Demand for homes is strong and seems likely to stay that way; however, housing inventory is low. “Our supply is so weak that it’s like when Covid first hit and there was a run on toilet paper,” Blum said. “Multiple offers will stay strong and on the best terms cash will win out. The normal flow of real estate has been decimated by people from blue states such as California, Washington, Oregon, Minnesota, New York, New Jersey, Maryland, Delaware and Virginia who are getting out of Dodge because of high property taxes and crime rates. All those people are moving to Texas or Florida, but a majority are moving to Jacksonville. It’s the x variable that went unnoticed and our real estate is being gobbled up by Pac-Man. As a result, prices are going up steadily and we are eventually going to become the pricing of California.”

Central Florida Continues to Break Records

According to the Orlando Regional Realtor Association, December’s median home price was recorded at $340,000—up 23.6% from $275,000 in December 2020—closing the year with the highest median home price ever recorded. Meanwhile, inventory was down to a historic record low of 47%.

Orlando-based real estate attorney Kevin Pribell, broker at Acres, Inc., is seeing multiple full-price offers within days of listing properties for sale. “I’ve recently had three listings that got between $7,500 and $23,000 over the Zillow estimated value on medium-priced residential properties,” he said. Rising interest rates could eventually impact home prices. “The escalation in values will slow down as interest rates go up, but the buying frenzy won’t stop.” 

South Florida Prices Steadily  Rising

Neal Oates, broker-owner of World Renowned Real Estate in Fort Lauderdale, said the market is frustrating some consumers to the point where they’ve decided to hold off while others are having to get “creative” to make a transaction work. “Buyers are asking, ‘If I want a piece of this dream what concessions do I have to make?’ Some are being asked to waive the appraisal contingency or they’re having to put more down even if they have 90% financing. Some sellers are asking for larger escrow deposits simply because they want to see if the buyers are willing to meet their requirements. Others are asking for post-close occupancy for the seller until they find a new place or they’re asking for the addendum that says the contract is contingent upon seller closing on their property in X amount of time. So, buyers in this marketplace can purchase property and go under contract but may not be able to occupy it immediately.” 

Home prices in South Florida are projected to rise by upwards of another 6% this year, Oates said. As of December 2021, the median sale price for a single-family home in South Florida was $475,000.

Another trend is single-family buyers opting for condos and townhouses instead. “Dr. Brad O’Connor mentioned that as well,” Oates said. “Today, we strongly encourage buyers to be flexible unless they have the means to potentially pay more than appraised value. Skilled agents who used to only work in single-family are asking buyers during their initial consultation if they would consider a condo or townhouse. We obviously want to work the way the client or customer wants, but we have to add our professional experience in a market like this.”

The post The Florida Real Estate Outlook for 2022 appeared first on iBuyer Blog.

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