Are you a first time home buyer? With so many choices to make and so much at stake, it’s essential that you prepare. For advice, check out the First Time Home Buyer Guide from realtor.com® to learn the 10 steps to purchasing your first home without a hitch.

See the complete article Find out more here

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The home appraisal process is just a formality, right? You’ve found the house you love, put in a good offer, and it was accepted! Time to break out the Dom Pérignon White Gold? Sorry, not yet.

If you’ve applied for a mortgage, your home-to-be still has to undergo a comprehensive appraisal of its worth … and an unfavorable appraisal can kill a deal. Yikes! It can be a nerve-racking ordeal, but it’s actually good for you. Allow us to demystify the process.

The only way NOT to have an appraisal accomplished is when you are paying for a home with cash.  With cash you are free to pay more for a home all day long.  However, if you are taking out a mortgage on a property (as most people do) then the lender will want to make sure that home is actually priced properly according to the current market.  The appraiser provided an independent evaluation based on the comparable homes (or comps) in your immediate area.

Appraisals estimate a home’s value with fresh eyes

Just because you and the sellers have agreed on a price doesn’t mean it’s a done deal—your lender needs to be on board, too. After all, it’s the lender’s investment as well.

Enter stage left: The appraiser.

While the home appraisal process is somewhat similar to getting comps—as you did to determine a fair price—appraisers delve in much farther to determine the home’s exact value.

They’ll investigate the condition, the square footage, location, and any additions or renovations. Another key difference is that when you looked at the comps, you were probably hoping for a specific outcome—perhaps even some flaw that you could use as a bargaining chip to lower the price.

Appraisers, on the other hand, are trained to be unbiased, says Adam Wiener, the founder of Aladdin Appraisal in Auburndale, MA. “I don’t care what anybody wants the home to be worth,” he says. “I’ll give you the answer. You may not like it, but it’s the answer.”

You’ll get a copy of the appraisal, as well

Appraisers set out to determine if the home is actually worth what you’re planning to pay. You might be surprised how little time that takes; they could be in and out of a home in 30 minutes, and that’s not a reason to panic.

Appraisers aren’t home inspectors, who examine every little detail. While they’ll pay particular attention to problems with the foundation and roof, the home appraisal process includes noting the quality and condition of the appliances, plumbing, flooring, and electrical system. With data in hand, they make their final assessment and give their report to the lender. The mortgage company is then required by law to give a copy of the appraisal to you.

Appraisers work for your lender—not you

As the buyer, you’ll be paying for the home appraisal. In most cases, the fee is wrapped into your closing costs and will set you back only $300 to $400. However, just because you pay doesn’t mean you’re the client.

“My client is the lender, not the buyer,” Wiener says. This ensures that appraisers remain ethical—in fact, it’s a crime to coerce or put any pressure on an appraiser to hit a certain value. Appraisers must remain independent. “Anything less, and public trust in the appraisal is lost,” says Wiener.

They protect buyers from a bad deal

In essence, the home appraisal process is meant to protect you (and the lender) from a bad purchase. For instance: If the appraisal comes in higher than your asking price, it’s generally fine.   It’s always possible that the sellers could decide they want more money and would rather put their home back on the market, but in most cases, the deal will go through as expected because both parties are under a contract to purchase at the currently agreed upon price as long as funding is approved.

If your appraisal comes in lower than what you offered, this is where things get tricky: Your lender won’t pony up more money than the appraised price. So if you and the sellers agree on $125,000 but the appraisal comes in at $105,000, it creates a $20,000 shortfall. What’s a buyer to do? Read on.

An appraisal is not a home inspection

As previously mentioned the two are totally different. The inspector’s job is to make sure all the mechanical and subsystems are working and that there are no structural issues. The appraiser’s job is to observe the house in its current state, compare that with similar homes in the area and come up with a valuation. Put another way, appraisers typically work on the assumption that everything is in good working order, whereas inspectors verify functionality.

A curveball appraisal isn’t necessarily the end

If the appraisal comes in low and your contract with the seller was contingent on an appraisal, you could walk away and have your deposit returned. If you prefer to buy the home anyway (or waived your appraisal contingency), there are some other paths you can pursue:

• Come up with the extra cash to cover the difference between the appraisal and offer price
• Ask the seller to cover the difference
• Challenge the appraisal and pay for a second opinion.  Although if it’s a VA loan that appraisal is on the books for 90 days

Keep in mind, though, that your new report could come out identical. Also keep in mind that if you do choose to walk away, that’s actually good news, although it may not seem like it at the time. Why? Because the appraisal kept you from paying too much for your home.

**Ryan Wheeler is an expert real estate agent and military veteran serving buyers and sellers of homes in the Shreveport Bossier City area.  Connect With Me

Are you a first time home buyer? With so many choices to make and so much at stake, it’s essential that you prepare. For advice, check out the First Time Home Buyer Guide from realtor.com® to learn the 10 steps to purchasing your first home without a hitch.

See the complete article Find out more here

Click Here to See if I Should Be Your Agent 

A home inspection can be a terrifying process to newbie buyers: What if the house you adore has major problems hiding beneath that shiny new coat of paint? If you lie awake haunted by visions of mold or “foundation issues,” it’s time to take a deep breath. Here’s everything you need to know about home inspections, and how (as scary as they might seem) they exist to protect you from a very bad deal.

Here are some insights into how to make the most of this all-important step. OK, exhale.

What is the Home Inspection Process?

The Inspection Period is the specified amount of time agreed upon by both parties in which the Buyer may examine the property.  In Louisiana, this is the “due diligence” period which also allows you to back out for any reason if you find problems with the home that make you uncomfortable.

The time frame selected for the Buyer can range is usually between 10 and 14 days and must be agreed upon by all parties at the beginning of the transaction. The Inspection Period begins when the buyer and seller enter into a contract.  The Buyer must accept or reject the property within this period.

Buyers and Sellers should make sure the inspection period provides adequate time for any authentication and/or appraisal process that may be necessary to complete the transaction.

Hire a top-notch home inspector

While it may be tempting to hire any run-of-the-mill home inspector to get the job done—particularly if the price is right—the inspection is no time to cut corners. After all, buying a home is an enormous investment. “Everyone does themselves a disservice when they shop by price alone,” says Alan Singer of Sterling Home Inspections in Armonk, NY. “Plenty of inspectors don’t know what they’re doing and set up shop because it’s easy to do.

So, first, check your local requirements: Many states require an inspector to have a license or insurance, and not having either is a big, waving red flag. Even if insurance is not mandated, you’re better off choosing an inspector who is insured, which protects both of you against errors and omissions. Membership in a professional trade organization, such as the National Association of Home Inspectors, indicate the inspector is up-to-date on the latest developments in the field—another giant plus.

Attend the home inspection

Even though you will receive a written report after the home inspection, you should attend the inspection while it’s being done. It provides a valuable opportunity to learn all about the inner workings of your would-be new home. “I much prefer it when buyers are there so we can discuss the home in person,” Singer says. “It’s much easier to explain the ramifications of an issue when we’re standing in front of it.” Plus, it sure beats deciphering a 10-page report about HVAC or plumbing problems.

So, don’t be afraid to ask questions. Really stick your nose into the home inspection. You and your inspector will be looking at all sorts of things you might have skipped during your showings, like the attic and crawl space, and under the sinks. Don’t be scared to delve into the details. Even the best home will receive a laundry list of to-do’s and potential problems, and fixing them will be much easier with a hands-on understanding of the issues involved. Consider it free (and invaluable) fix-it advice.

Don’t panic (until it’s time to panic)

The vast majority of issues raised during a home inspection are repairable—after all, as Singer describes it, you’re buying a “used home.” Just like a used car or an old computer or second-hand clothing, there are bound to be problems. Some of them may be small and easily fixed, like leaky pipes and rattling doorknobs. But if an inspector discovers a major problem—with, say, the foundation or water intrusion—even that may not be a deal killer. In fact, it could be a bargaining chip you can discuss with the sellers before closing the deal.

Work with your real estate agent to determine the best approach. If your offer was contingent on a successful inspection (and most are), you have a good basis to request that the current owners make repairs before closing. You’ll want to get this in writing, along with provisions if the sellers fail to fix the problems.

But there’s no obligation for sellers to address the inspector’s discoveries. If they aren’t willing to shoulder the burden, you need to assess whether the cost of a new roof—or mold abatement, or fixing the foundation, or whatever the problem is—is worth the reward. With no solution beyond paying $30,000 from your own pocket, you might need to move on to a more habitable home. “People get very invested in the home they want to buy, and it all becomes a very overwhelmingly emotional experience,” Singer says. “But they need to listen to the advice of the inspector, take a look at the financial ramifications, and make a clear-headed decision.”

To Inspect or Not

Home buyers are often conflicted about whether or not to spend the money to hire a home inspector. The responsible answer to this question is… yes, absolutely. Let me say this about cost; the price of an inspection is generally $250.00 – $400.00. Compare that to the price of the house and I would suggest that it becomes fairly insignificant.

However, there are some exceptions to this rule; for example, if the buyer is a general contractor, he might be knowledgeable enough to do the inspection himself, or if the buyer is a professional investor with lots of experience, he may also do well. But, to the average person, buying a home and conducting a formal inspection is a must.

A good home inspector will bring to your attention everything that is wrong with the house so you can handle it accordingly.  Then there is the added benefit of being able to use the inspection report to get back to the negotiating table. I have literally saved buyers thousands of dollars in lowered purchase prices using a detailed inspection report.

Hopefully, all will go well and your home inspector will say it’s fine to move in.  The lender will then do the next step for you: Order the Appraisal

**Ryan Wheeler is an expert real estate agent and military veteran serving buyers and sellers of homes in the Shreveport Bossier City area.  Connect With Me