Seaside Park Real Estate Agent Reviews the Appraisal Process


If you have been involved in a real estate transaction at any point in your life, you have heard the term appraisal.  Not many of us, however, know exactly what it is, why it’s done, or who does it. It is helpful to understand as many real estate terms as you can. An appraisal, in short, is a financial assessment of the property being sold. It is done by an unbiased third-party certified appraiser. There are a few ways appraisers decide upon the valuation and is done to ensure the amount of the mortgage is not over what the property is worth. The lender will contact a Seaside Park real estate agent, like Birchler Realtors, to hire the appraiser. Most of this is done likely without the buyer or seller even knowing.   

The What and Why of an Appraisal

Seaside Park real estate appraiser desk with calculator and open laptop with papers in piles around desk

An appraisal is an evaluation of a property’s value given by a licensed or certified professional. This person should also be completely uninvested in the sale so that the valuation is unbiased. This step in the buying process is initiated by the mortgage lender. It is completed during any buying, selling, or refinancing transaction. The only real estate sale when an appraisal is not necessary is when it is a cash sale. This is because there is no lending of money. The reason it is done is to protect the lender. Once the property is evaluated, the amount of the mortgage should not be in excess of the value of the home. This ensures that if the borrower defaults on their mortgage, the lender can sell the home and recover the money.

Who Performs a Seaside Park Real Estate Appraisal

Depending on the state that the sale is being done in, there are different requirements as far as education and experience in order to become either a licensed or certified appraiser. In New Jersey, for example, there are three levels of licensure available.  The first step is as a trainee appraiser.  This stage requires no previous experience but does require 75 hours of approved appraisal related course work. Once a trainee completes 1,000 working hours as well as 150 hours of authorized suitable education, they can then apply for a license. A certified appraiser must fulfill additional college-level educational and experience requirements as well as pass an exam. Many Seaside Park real estate offices have licensed and/or certified appraisers on staff.

How is the Evaluation Determined

Seaside Park real estate appraisal can be impacted by how busy your street is, windowed home shown with traffic driving by in front of hedge

There are many ways for an appraiser to perform their inspection. First, of course, there is a physical exam of property. This looks for any imperfections or repairs that may affect the price of the home. Another factor that plays into the final number is comparison home sales in the same neighborhood or immediate area. This is important to know because if your home was recently updated and is in perfect condition, but your neighborhood is in a decline, your home value may be less than what you think it is worth. What type of street the home is on is also a factor in the value of the property. How busy or noisy the traffic is can greatly reduce the appraisal. Lastly, the Seaside Park real estate market conditions in general has a large impact on the appraiser’s decision.

What Happens if the Appraisal is Low

It can be the case that the appraiser assigns a value to a property that is less than the amount of the offer. If this happens, there are a few things that can be done. First, the buyer may be asked by the lender to pay the difference. This would mean increasing the amount of the down payment so that the total amount of the mortgage has been lowered to match the appraisal. Secondly, if the buyer really wants the property, but cannot make up the difference in price, they can attempt to renegotiate a lower purchase price with the seller. If neither of these are options, the last thing a buyer can do is back out of the sale. However, the only way you can do this is if you have an appraisal contingency. Be sure to discuss this with your real estate agent before you sign anything.

A Little Knowledge About Seaside Park Real Estate Appraisals

Having the little knowledge in this article about appraisals can help you in your real estate transactions. The more you understand what impacts an appraisal, you can appropriately upgrade your home without pricing your home out of the market. Or, if you are buying a home and the appraisal does not meet the loan amount, you now know what your options are and how to protect yourself. At any point in your sale, ask your Seaside Park real estate agent any questions you have before you sign any paperwork. If you don’t understand something, don’t sign it until you do. And always keep yourself protected with an appraisal contingency plan.

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