Cheryl Deschenes' Blog
Shopping for a house is a high-stakes game. If you’re a first-time buyer, it can be difficult to gauge the value of various components and features of a home. Appraisals are designed for just this reason.
However, an appraisal is a subjective tool to determine a rough estimate. Furthermore, there are a number of things you can’t learn from an appraisal--such as how convenient the home would be for your work commute.
In this article, we’re going to help you, the homebuyer, determine the true value of a home as it would mean to you in your everyday life. Read on for tips on finding out the value of that home you’ve been dreaming of and deciding whether it’s really the best home for your budget.
Appraisals are a baseline
When lenders are in the process of approving your home loan, they’ll want to decide whether the home you’re buying is worth the amount you’re paying. To achieve this, they’ll typically hire a third-party appraiser.
Find out from your lender which appraiser they use and read their online reviews. This will ensure that they’re a trustworthy source of information. Also be sure to check that the appraiser is certified and that they work with a diverse range of clientele (not just your lender!).
Since you’ll likely be paying the appraisal fee as part of your closing costs, make sure you’re happy with the appraisal and appraiser.
Key appraisal factors
After the appraisal, consider getting a second opinion or inspection of any of the key components of your home that may impact the appraisal. Some of these factors include:
The roof, HVAC system, and septic systems
The energy-efficiency of the home
The current market value in the area
The general upkeep of the home--a few cosmetic problems shouldn’t affect the home value much, but serious neglect can cause long-lasting and expensive issues like mold, water damage, pest invasion, and more
What an appraisal can’t tell you
Now that we’ve discussed the nuts and bolts of home value, we have to venture into what value means to you and your family. You’ll need to ask yourself a series of questions, and some of them won’t have a cut-and-dry answer.
First, how well does this home fit into the work life of you and your spouse? Will it mean a shorter commute, and therefore lower transportation costs and more free time? Putting a dollar value on an extra thirty minutes not spent in traffic can be difficult, but it’s a worthwhile exercise to take part in.
Furthermore, does the house have features that will make it a better asset in years to come? Energy-efficiency, proximity to in-demand schools, businesses, etc., can all be selling points for future buyers that are willing to pay more for your home.
Using a combination of a certified appraisal and some introspection, you should be able to come to a confident conclusion as to the value of the home as it means to you and your family.