Buying a Havasu home involves a lot of steps. Saving up for a downpayment. Finding the right home. Putting in an offer. Waiting to hear back on your offer. Getting a loan to pay for the home. Then, signing your final sale paperwork and moving in. Of course, within each of these steps lie other steps. For example, one of the steps in getting a loan is having an appraisal performed. This could make or break your entire transaction. So, what exactly is it and how could it help or hurt your home purchase?
What is an Appraisal?
If you need to borrow money to pay for your new Lake Havasu home, your lender requires you to obtain an appraisal. An appraiser comes out to look at your house. Then, they compare your home to others sold within the surrounding neighborhood in the last 60 to 90 days. Your 3 bed/2 bath home might offer fewer rooms than the 4 bed/2 bath home that recently sold up the street. However, the size of your home and the lot it’s located on might be bigger. Also, let’s say your home has a swimming pool and the other didn’t. An appraiser could decide the value of your home is higher than the other one. Things like age, location, amenities, and size all factor into the appraised value of a property. But just because you’re willing to pay more doesn’t mean that the home is worth more.
How Does an Appraisal Affect the Purchase of My Home?
Mortgage companies want Havasu homes to be worth at least as much as the buyer wants to borrow. If your appraisal comes in below the amount you ask for, mortgage loan approval could be a problem. For example, you find the Havasu home of your dreams. The seller wants $250,000 for it. You agree. The appraisal says it’s only worth $240,000. You have three options. First, go back and ask for a reduction of the sale price. As you can imagine, the seller won’t be happy to hear that. Secondly, you come up with the $10,000 difference out of your own pocket. You might not be too happy about that. But, if it means the difference between making the sale happen and you losing the house altogether, it’s worth considering. Lastly, you could simply walk away. Then, the whole process of finding your next home starts all over again.
Finding the Havasu home of your dreams is only one step in a long journey. Just because you’re willing to pay a higher price for a home doesn’t mean it’s worth that much. Your appraisal can have a huge effect on whether or not your real estate transaction succeeds.