THE APPRAISAL: WHAT’S IT REALLY WORTH?
You know what the property is worth to you. After all, you’ve been looking for weeks! We have also done our homework and told you what we think fair market value is. So why do you need an appraisal?
Your lender is using the property as collateral for the loan they are granting you. And they need “proof” that the property is worth what you’re paying (and what they’re lending). The lender hires the appraiser to get this proof. The appraisal is paid for by you, and it really is for your benefit. Never allow your lender to order the appraisal until the option period is over. Otherwise you run the risk of paying for an appraisal and then opting not to purchase the property.
Sometimes an appraisal can be used as a bargaining chip. Let’s say you were in a multiple offer situation and just “had to have” a particular property. Let’s say that you offered more than list price because you wanted it so badly. If the appraisal comes in lower than the negotiated sales price, you can go back to the negotiations table and get the price lowered. After all, the seller knows that most buyers will order an appraisal, and if the higher price can’t be justified the seller will not be able to find another buyer at that price.
THE SURVEY: BLUE LINES OR BLACK?
A survey is required for all properties except for condominiums. They are not required for condominiums because condominium ownership is in terms of “units”, whereas other properties are defined in terms of “Lot and Block”, i.e. the land on which the structure is located. The survey shows the physical location of the land, the location and dimensions of the structure on the land, and any setbacks and easements that run with the land. Sometimes it’s called a “Blue Line”, because surveys are done in blue ink.
Why do you care about the survey? It can point out problems that can cost you money or cause you stress down the road. Here are just a few problems that a survey can bring to light.
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