Home Appraisals Explained: What Central Ohio Buyers and Homeowners Should Know
Whether you’re purchasing a home or refinancing your current mortgage, your lender will typically require an appraisal before the loan can be finalized.
An appraisal provides an independent opinion of the property’s current market value. The lender uses this information to confirm that the home supports the amount being financed and to evaluate the risk associated with the loan.
If you’re planning to buy or refinance a home in Central Ohio, here are the appraisal basics you should know.
Who Conducts the Appraisal?
Home appraisals are completed by licensed, independent real estate appraisers. Although an appraiser evaluates the property’s overall condition, an appraisal is not the same as a home inspection.
A home inspector examines the property’s systems and components to identify defects or potential repairs. An appraiser focuses primarily on the home’s value as it relates to the local real estate market.
What Does an Appraiser Consider?
An appraiser may evaluate several factors, including:
- The home’s location, size and overall condition
- The number of bedrooms and bathrooms
- The property’s features and amenities
- Renovations, additions and significant improvements
- The home’s age and quality of construction
- How well the property has been maintained
- Recent sales of comparable homes in the surrounding area
Because real estate values can vary significantly from one Central Ohio neighborhood to another, nearby comparable sales are an important part of the appraisal process.
How Is an Appraisal Completed?
The lender generally orders the appraisal and determines which type is appropriate for the loan. Depending on the property, financing and lender requirements, the appraisal may be completed in one of several ways:
Full appraisal: The appraiser visits the property, evaluates its interior and exterior, and compares it with similar recently sold homes.
Drive-by appraisal: The appraiser views the property from the exterior and relies on available market and property data.
Desktop appraisal: The appraiser completes the valuation remotely using public records, listing information, photographs and recent comparable sales.
The type of appraisal used may differ depending on whether you’re buying a home, refinancing or applying for another type of financing.
What Happens If the Appraisal Comes in Low?
A low appraisal does not necessarily end the transaction, but it may require the parties to reconsider the terms.
When purchasing a home, possible options may include:
- Renegotiating the purchase price
- Asking the appraiser to reconsider the value if relevant information was overlooked
- Bringing additional money to closing
- Restructuring the financing
- Exercising an appraisal contingency, when applicable
When refinancing, a lower-than-expected appraisal may reduce the amount of equity available, change the loan terms or prevent the borrower from qualifying for the desired loan.
The purchase contract, appraisal contingency and loan requirements will help determine the available options. Your real estate agent and lender can guide you through the next steps.
Local Guidance Makes a Difference
An appraisal is only one part of a successful real estate transaction. Understanding neighborhood values, recent comparable sales and current Central Ohio market conditions can help buyers and sellers make better-informed decisions from the beginning.
Have questions about buying, selling or navigating an appraisal? Connect with Rolls Realty for experienced, Seriously Local guidance throughout Central Ohio.
Rolls Realty — Seriously Local.
