Buying a Boston condo for sale? You may already have a lender and a real estate agent in mind, but do you also have a home appraiser and inspector in mind? Why does a Boston condo for sale need both, anyway?
The key difference between a home appraiser and a home inspector is that they work for different people. The home appraiser is there at your potential home on behalf of your lender. The home inspector, on the other hand, is requested by you, the buyer – usually someone your real estate agent is recommending.
Your Home Purchase Team
What at first take might seem redundant is actually a very effective system for ensuring that the price you’re paying for a Boston Midtown condo is really what it’s worth. Think of the inspector and appraiser as more players on your team. When you ask your partner, close friends, kids or parents what they think of the price and condition of a Boston condo for sale before you buy it, you’ll get different information than when you ask your real estate agent — but it’s all valuable information. In the decision-making process, the professionals that appraise and inspect your home perform the next line of inquiry.
What is does a Home Appraiser Do?
A home appraiser conducts an appraisal of what the estimated value of a property based on the condition and location of the property, plus comparable sales and market trends. It’s performed by a licensed Austin appraiser. Why do you need one? There are several reasons why an appraisal is necessary, and we discuss the top five below. We’ll also answer some FAQs about the process and what you can expect.
WHEN DO YOU NEED A HOME APPRAISAL?
1. Financing a purchase of a home
A home appraisal is a term frequently used in the home buying process. Home appraisals are primarily performed at the request of a mortgage lender. All lenders require an appraisal during the loan lending process as an objective way to assess the home’s market value and ensure that the amount of money requested by the borrower is appropriate. In a nutshell: when you’re buying a home in Austin, banks want to protect their investment should a buyer default on their mortgage. If the actual market value of a property is lower than the sales price, the lender won’t be able to sell the property for enough money to cover the loan.
2. Tax assessment
Receiving your property tax bill in the mail is always an anxiety-inducing moment. Property taxes and your home’s appraised value go hand-in-hand. The higher the assessed value of your house, the higher the property taxes. If you believe your property tax bill is too high, you can formally appeal your property tax bill with the Appraisal Review Board. This link works for Travis County, but each county has their own taxing office.
As part of the appeals process, you’ll be tasked with gathering important information, such as comparable market analysis (information about the sale prices of nearby homes). We, at Habitat Hunters, provide this information at no cost to our current and former clients, and for a reasonable fee to others. Additional information that will help you are: documentation regarding your home’s location (if it borders a road with heavy traffic or other external characteristics that can lower the assessed value of your home) and the current condition of your home (such as being in need of significant repairs) all of which can lower the assessed value of your home, and ultimately, your taxes.
Many homeowners consider having their home independently appraised, which could help strengthen their case during the appeals process.
Thinking of refinancing your mortgage? Because market conditions change rapidly and property values in your neighborhood might be much higher (or lower) than when you bought your home, you need to have your property’s value appraised when refinancing. The results of your home appraisal will determine your ability to qualify for the new loan you want. Ideally, you’ll want to receive an appraisal value that’s higher than the total refinance amount. Unfortunately, an appraisal can come back low, which can negatively impact your refinancing plans.
4. Applying for a Home Equity Loan
The Federal Trade Association defines a home equity loan as a loan for a fixed amount of money that’s secured by your home. You repay the loan with equal monthly payments over a fixed term, just like your original mortgage. If you don’t repay the loan as agreed, your lender can foreclose on your home. The actual amount of the loan also depends on your income, credit history and the market value of your home. Similar to mortgage loans, a lender requires a home appraisal for home equity loans to protect itself from the risk of default.
As part of the divorce process, couples have to negotiate the division of property — including the family home. Successfully negotiating a divorce property settlement depends on an accurate assessment of the value of the property to be divided, performed by a fair and impartial appraiser. After the appraisal is performed, a decision must be made: does one person get the house (perhaps by buying out the other person), or will the property be sold and the proceeds divided?
MORE INFORMATION ON HOME APPRAISALS
What factors determine the value of a property?
- The general condition of the home’s interior and exterior, size of gross living area, number of bedrooms and bathrooms, signs of any obvious damage, any improvements or additions that enhance – or detract — from the home’s value.
- data of similar homes that have recently sold in the same area.
- of additional market data (neighborhood, local amenities, accessibility to transportation, schools, etc.)
How long does an appraisal take?
This depends on the size and details of the property. It’s estimated to take anywhere from 30 minutes to 3 hours.
Who pays for the appraisal?
When it’s a home sale, the buyer of the property is responsible for paying the cost of an appraisal; it’s typically paid at closing as part of the closing costs. If you’re looking to refinance, applying for a home equity loan or seeking the expertise of an appraiser when appealing your property taxes, you, as the homeowner pays for the appraisal.
Do you have questions about a home appraisal or the process?
Home Appraisers Assess Value
Home appraisers must be licensed and are selected by your lender from their list of approved appraisers. Their mission is to establish the fair market value of the Beacon Hill home you wish to buy and report back to the lender so that they know whether the amount they’re loaning you makes sense. The home appraiser doesn’t do a detailed inspection — they’re just getting the basics. How many bedrooms? What’s the square footage? Are the exit door working properly? Is the basement flooded? A typical appraisal visit in our area runs 30 to 45 minutes.
The other big part of the appraiser’s job is to look at the comparable Boston condos for sale that have sold in the area recently. These numbers help them figure your potential downtown condo value. In a slow market, this is difficult because not that many Boston condo for sale may have sold in the given area, at least not in a relevant time frame. Luckily, in downtown Boston right now is moving quite well for this season, so appraiser’s estimates will be fairly accurate.
The Boston condo value the appraiser comes up with should pretty closely match the price you and the seller have negotiated. If the appraised value is less than the price you’ve offered to pay, the difference will have to be made up in cash, or the seller will have to come down on their price, or the deal is off! (This is where having a skilled real estate agent really pays off!) Pro tip: with so many multiple offer situations in Boston some buyers are offering prices that have no chance of possibly appraising, they are relying on the appraiser to bring the price down at the end of the day. This is a risky gamble, but it is a trend.
Home Inspectors Protect Home Buyers
A home inspection is heavily recommended in downtown Boston, and inspectors also need to be licensed in the state of Massachusetts. Most real estate agents have a few inspectors they like to work with because they’re reliable, experienced and reasonable. Unlike an appraisal, an inspection has no effect on the amount of money you can borrow, but they can definitely affect the terms of the transaction between you and the seller.
Home inspectors — good ones — leave no stone upturned when it comes to assessing the condition of the home you’re hoping to buy. They peek under the carpet and into heat ducts (they cannot cause any damage, but will look everywhere they have access to) They check out all of the home’s “mechanics”, including the water, electrical and plumbing system. They even typically get up on the roof to inspect its condition and crawl under home if there is a crawlspace.
Your home inspector will then hand you and your real estate agent a detailed report showing what they found in the Boston condo for sale that you’re thinking about buying. This report will not say anything about the home value, but it will alert you to things you and the seller might not have known about, and help you determine if there’s anything that should be repaired before the home changes hands.
What if the inspection turns up costly repairs?
Sometimes a home inspection can reveal things about a home that the seller never suspected. Many issues can go undetected for long periods of time — in Boston’s older homes common ones are high radon levels, mold, broken sewer lines or gas lines.
If there’s something in the home inspection you’re not comfortable buying into, speak up! Your real estate agent’s job is to make sure you’re 100% satisfied, and renegotiating is the most important thing they can do to ensure this. Just about any stipulation can be written into the sales contract, as long as the seller agrees to it. You could get a discount off the price of the home based on the repair estimate, or the seller could agree to fix the problem before the closing date.
Boston Seaport condo buyers need to be extra careful when having the seller repair the issue. Details of the repair should be spelled out in the contract, or you risk having it “patched over” instead of actually fixed. Usually the best scenario is to have the estimated repair cost come out of the price of the home, then have a licensed professional you can personally pick and supervise – do the work.
Trusting Your Boston Real Estate Broker
When you know and trust who you’re working with, things just go so much smoother. You might not know any good lenders or reliable home inspectors, but we do. Our buyers’ team can hook you up with the people we’ve worked with for years. Buying a home is a complicated process — don’t let it be any harder than it needs to be! Contact our buyers’ team today.