influenced by a buyer, seller, real estate agent or lender.
There are two major processes that a home appraiser uses to create a valuation. First, there are the property’s physical attributes, including size, location, and condition, which an appraiser will evaluate during an on-site inspection. Second, the appraiser compares the property that you are buying (called the subject property) to similar, comparable properties (referred to as “comps”) that have recently sold, and makes price adjustments for differences like renovations, amount of garage space, views, and amenities that are perceived to contribute to the value. When the appraisal is delivered, your agent should review it to make sure there the comps seem appropriate based on their knowledge of the local market. They need to help ensure that the value is good and that the property was appraised appropriately. The lender will also thoroughly review the appraisal report to be sure that the value can be substantiated. Sometimes a home’s appraised value is lower than the agreed- upon purchase price. A low appraisal could affect the sale of a home because the mortgage lender will not lend more than an agreed upon percentage of the appraised value. If you don’t agree with an appraisal, you can ask the lender to revisit the assessment—a process called a Reconsideration of Value (ROV). If the appraisal results in pre-sale repairs being necessary, the loan officer will notify the agents. At that point, perhaps your agent will negotiate having the seller do the repairs for the house in order for it to appraise at the sales price. Or, possibly, the price of the home could be adjusted to take into account the repairs you will have to pay for, or money can be set side in an escrow account contributed by the seller to compensate you for the "cost to cure". If not the contract can be renegotiated or cancelled.
The appraisal is the final step of the processing phase.
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