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Adventures in house hunting

Appraisals and InspectionsWe’re at the halfway point on our trip through the Real Estate Contract to Buy. Our next stop is the appraisal.What exactly is an appraisal? An appraisal is an estimate of the quality or value of the property. It’s also a process by which a licensed appraiser obtains his or her conclusions about the property’s value, and prepares a report detailing the valuation and how the conclusions were reached.Who orders it and who pays for it? Generally, your lender will order the appraisal, and you pay for it. Before lending you the money for your home, your lender wants to make sure it’s worth the contract price. If the appraisal comes in higher than what you’ve offered, congratulations! You’ll have instant equity in the home and there should be no problem having your loan approved. If the appraisal comes in lower than what you’ve offered, however, the lender will be concerned, and chances are you’ll either have to negotiate a lower price with the seller, or you can cancel the contract.A number of factors come into play in writing the appraisal. The number of similar, recently sold properties, the condition of these properties, motivation of the sellers, and the amount of time on the market are all taken into account when preparing the appraisal. Keep in mind that the appraisal is an “estimate.” But it is an estimate based on available information. Appraisers get their information from the MLS, from Realtors and other sources.(If it’s a cash transaction, you don’t have to get an appraisal, but I would recommend one anyway.)DisclosureNext stop on the contract roadmap is the disclosure portion of the contract. If the home was built before 1978, you should have received a Lead Based Paint disclosure from the seller before you even signed the contract. The seller will also provide you, within a few days of signing the contract, a form called (appropriately) a Seller’s Property Disclosure. This form lists such things as the appliances, the electrical, heating and cooling systems, water supply and systems, the roof, structural conditions and even environmental conditions. The seller states, to the best of his knowledge, that either these items are working, not working or not included in the sale. This gives you, the buyer, a good idea of possible issues with the property. InspectionI always strongly recommend that buyers get the home inspected by a licensed inspector. If they find items beyond the scope of their expertise, sometimes more inspections are needed. For example, if there are concerns about the integrity of a home’s foundation, a structural engineer might be consulted. The inspection can be a deal-breaker for either the buyer or seller, and I always counsel my clients not to pack any boxes until all parties are past this deadline and have resolved their concerns.The process goes like this: An inspection date is set and the inspection is done. If there are issues with the property, the buyers submit an inspection report, detailing what items they want replaced or repaired. This report is submitted to the sellers, and the sellers decide if they want to do all the repairs, some of the repairs, or none of the repairs. Here’s where things can get ugly.Both sides have their own notion of what should happen. Only twice in my 10 years of experience has a buyer accepted the house “as is” and not requested any repairs to be made. Most buyers want major problems addressed, especially if they’re making a full-price offer. Occasionally, a new roof needs to be put on the home or a furnace replaced, but usually repairs are minor, cost-wise. And in most cases, the sellers will agree to perform the repairs, as long as they feel the buyer is being reasonable. After all, a 20-year-old home will not look like a brand-new model home, so don’t expect the seller to make it that way.What about a newly-constructed home? It should be in perfect condition, right? At the very least, insist on a walk-through of your new home and make sure you have a one-year builder’s warranty. Inspection time is another very good time to have a Realtor on your side. Many times, emotions get in the way of parties reaching an agreement. A good Realtor can help you remove emotion from the equation and make a good decision, whether you’re the buyer or the seller.Have a real estate question? Call or e-mail me at haynedc@homeswest.us and I’ll answer it in a future column. Dianne Haynes Wire Fence Properties 970-624-8535Have a real estate question? Call or e-mail me at haynedc@homeswest.us and I’ll answer it in a future column. Dianne Haynes Wire Fence Properties 970-624-8535


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