How to Weigh Home Appraisal Costs Against Risk
A home appraisal is done by a certified appraiser to get a professional and unbiased opinion of the value of that home. An unbiased appraisal is necessary to diminish the risks you face if buying a home. Appraisals are also done for homes that are in court cases, owners applying for a mortgage, home equity loan or if the home is owned by more than one party.
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Instructions
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Hire only a certified and licensed home appraiser who is familiar with the area. As an educated consumer, you need to know the risk involved in owning the home based on the appraisal. The home appraisal will not only take the value of the home into consideration, but also the area, which is why it's important to have an appraiser who is familiar with your area.
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Study the appraiser's report thoroughly and write down any questions you might have. Factors that will increase your risk if buying the home include the number of homes in the area that are foreclosed upon, the turnover of homes in your area, the price paid for similar homes in your area and the condition of the home that's being appraised. If the neighborhood has many homes that are foreclosed on, it will be difficult for you to sell if needed. Always weigh the risk of buying with the necessity of selling if you have to.
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Check for specific risks to that particular home, which may include asbestos siding or ceilings, lead paint or radon. These are health hazards that will require licensed contractors to repair and represent a risk to you personally as well as financially. These items are a separate risk from those found by home inspectors. If the cost of the home is too high based on these risks, your financial risk is as well.
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Price the cost of necessary repairs, as stated on the home appraisal form. Contact the seller or real estate agent to either negate the contract or adjust the price downward by the cost of the necessary repairs. If the seller agrees to reduce the selling price by the cost of repairs, your financial risk is greatly reduced.
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