If your family is growing or a work transfer requires you to move from your old home into a new one, you may want to refinance your mortgage or search for a new home in a different neighborhood. For this reason, it is essential to have a good understanding of the home appraisal process and the fees that come with it.
If you plan to refinance your Sacramento real estate mortgage, sell your old home, or buy a new one, remember that getting an appraisal is key to a successful transaction.
Even if you live in the most affordable neighborhood, the median home value is continuously changing. This is especially true for the Sacramento metro area, including North Sacramento.
Having an appraisal done by a reputable company that is familiar with the home values in your region can save you a lot of headaches.
For mortgage refinancing, you’ll need to seek professional financial advice, which should include getting a fair evaluation of your property to determine the market value. It is always recommended to get your house prepared in the best condition before getting an appraisal for refinancing.
The cost of an appraisal depends on the size of your home, neighborhood, and the city it is located.
In this article, we’ll talk about the housing market, how home appraisers work, and why it’s essential in California to have your home appraised before selling or buying.
What is a Home Appraisal?
The home appraisal process involves seeking a professional view on the selling/buying of any property. The process determines whether the price tag on the house is right. If you want to reach a specific value, the home’s location, current condition, and features are all considered. You need an appraisal when buying or selling a house to ensure the home values align before proceeding with any home sales.
Lenders/banks are critical of the process because the house becomes the collateral for the mortgage. If you receive more than the home’s value, repayment can become a problem.
Therefore, the banks always want a professional appraisal to be safe and ensure minimal risks. In case of any default or the home goes into foreclosure, they will need to sell it to recoup their money.
On the other hand, it is also a safety net for the buyer or sellers. When a professional appraisal takes place, the asking price should align with the median sales price in the surrounding area, including an expensive neighborhood where sometimes the price is exaggerated based on the city.
Who is a Real Estate Appraiser?
A home appraiser is a professionally trained person who specializes in real estate valuing and is contracted to give independent and expert opinions on home values. They make an in-person visit to the property for inspection, thoroughly evaluate it, and compare it to similar ones in surrounding neighborhoods before arriving at a value.
The appraiser assesses the house’s current condition, interior and exterior views, dimensions, and amenities present. The appraisal process typically takes less than an hour. Based on this evaluation, your bank may decide to refinance your mortgage or otherwise. They may also consider your income and creditworthiness.
It is always best to get financial advice before signing any legal paperwork. The appraisal will provide you with a price per square foot according to the current trends in the housing market. They will look at any evaluations from last year and consider any significant repairs, such as a new roof.
Whether the home you are buying or selling is in Sacramento, San Jose, Tahoe Park, the Bay Area, San Francisco, South Hagginwood, Citrus Heights, or any other city in the California region, it is highly recommended to contact a reputable real estate agent.
Who Chooses The Appraiser?
Real estate agents work closely with real estate appraisers and can recommend one for you when making an offer on a new home or if you are putting your house on the market. In some cases, the financial institution you work with might assign a specific appraiser to your home.
Some of the most popular neighborhoods in Sacramento County are considered to be in a seller’s market, and you can sell your house fast. You’ll probably even get more money than your asking price, thanks to the current real estate market conditions.
If you want to buy a new home construction in the state capital, the housing costs will be much lower than in the San Francisco or Bay Area. However, make sure you partner with a realtor you can trust and who can provide you with the median price for single-family homes in the cities you are interested in living in.
What an Appraiser Looks For During the Inspection
Many things come into play before reaching home values in the Sacramento real estate market. However, about 70% of the decision depends on the current sale value of similar properties in the same or even other cities.
When looking to sell your home, you’ll want to receive multiple offers, including cash offers. Houses for sale in the Sacramento region and other areas of California are in high demand. That said, you can adopt some home improvement strategies to get a higher appraisal value.
Therefore, hiring a trustworthy real estate agent is key to getting the most money for your home. They can give you tips on preparing for your appraisal and suggestions for improvements that can make a difference before the scheduled date.
An appraiser checks the following during a visit:
- The exterior and interior state of the house
- The number of rooms, and if the bedrooms have any additional value added to them
- The state of the kitchen and bathrooms, plus they’ll check if there have been any add-ons or improvements
- Check the roofing (for leaks, mold, etc.), windows, doors, wiring, heating system, and plumbing
- The age of the aforementioned is also considered during an appraisal
- The exterior components of the home, including pools, garage, seating areas, etc.
- Location of the real estate property
Keep in mind that any appearance deficit can affect your home value, and by partnering with a realtor, you can avoid the biggest mistakes that affect home values during a real estate appraisal. If major repairs are needed, accommodation requests can be addressed with real estate agents if you need a place to stay while the work is being done.
Real estate appraisals are done differently today compared to a decade ago in California. Since the housing market is booming, it’s important to work with an appraiser that comes highly recommended and is licensed in the state of California.
The real estate commission has implemented many rules and laws pertaining to appraisals, and you’ll want to speak with realtors who are up to date on the latest policies and changes. The primary goal for people who own single-family homes in the Sacramento region is to get an appraisal and compare prices in the surrounding neighborhoods.
How the Home Appraisal Process Works
Banks and lenders require an appraisal before financing or refinancing your mortgage. It is to protect their interest and avoid/reduce any future losses. In Sacramento real estate mortgage refinancing, the homeowner is responsible for paying the appraisal fee.
The appraiser must be licensed and abreast with the locality of operation. They should not have any direct interest in the selling or buying of the house and must not be acquainted with any of the parties (lender or borrower).
Several considerations are made when determining home values. Aside from using the price value of similar properties in neighborhoods, and the current market trends, the location also matters. That aside, the amenities, number of rooms, building plan, and many others come to play as well.
The appraiser makes an in-person inspection of the exterior and interior of the property and makes a report. In the report, they will state the current condition of your home, including areas needing repairs.
It is through these observations and comparable prices that they settle on a value. This is why any major repairs should take place prior to the inspection. An appraisers report must, among other things, include:
- The street maps of the area where the appraised house is situated, and the comparable property prices used, including the names of nearby neighborhoods
- Photographs of the front exterior view of the similar properties used
- The sketch of the exterior area and a photograph of the front, back, and street view
- The property’s square footage and how the calculation was done
It is worth noting that the appraisal determines whether your lenders would refinance the mortgage. If your home value is less than the 80% equity required, the lender may not refinance the mortgage.
In such cases, you would need to consider a cash-in refinance or pay private mortgage insurance (PMI). The financial institution handling your mortgage will never give you more than the home’s worth. This is why the appraisal process is so important.
How much does an appraisal cost?
Depending on the home size, you may pay between $300 to $450 for a full single-family home appraisal process in the Sacramento, CA region. The price will also depend on other factors as well, such as the condition, value of the property, and the neighborhoods.
You may pay higher for larger homes. Also, if your home is in a bad state, expect to pay more. However, the fees should be reasonable and fall within the expected costs under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The cost of an appraisal will vary in some cities. For instance, an appraisal in San Francisco or the Bay Area will probably be higher than an appraisal in an affordable neighborhood in East Sacramento. Of course, the size of the houses will also be a significant factor.
How to Get a Second Opinion
Sometimes an appraisal may be lower than you expected, and you may want a second opinion. In such cases, you can appeal the results by writing to the lender. However, chances of getting a higher appraisal are low, but there is no harm in trying. Before seeking an appeal, you need to have enough facts and evidence to back your stance.
The only way to succeed in an appeal is to prove that the appraiser made errors during the process. You have to prove that they made errors in the square footage calculations, used unsuitable comparable market values, or did not include some important amenities, which could have raised the value.
It’s essential to ask your real estate agent for guidance on how to proceed. Their expertise in the housing market will give you suggestions on how to get a new appraisal or what the next steps should be when trying to sell your house fast.
The Bottom Line
Getting to know how appraisals work is key to securing a mortgage or refinancing your current loan. It puts you in the best position to prepare your home for a higher value. If things don’t go your way, you can file an appeal, use the PMI, or cash-in refinancing options to close the deal.
Contact us today if you want an expert real estate agent to guide you through the appraisal process and help you get the best price for your house.
