What You Need To Know About Your Home Appraisal And Your Mortgage

When buying a home, there are certain steps a buyer should go through before the home sale is official. First the buyer makes the offer, then the offer is accepted.

Next the buyer schedules the inspection and home appraisal. Finally, everyone is ready for closing.

It’s easy to overlook the impact of some of these steps, but when it comes to a mortgage, the home appraisal is actually quite important. Banks want to see that they are lending money for an investment that is worthwhile, so that appraisal is a crucial step to getting financing. Here is what buyers need to know about how the appraisal could affect their mortgages.

Understanding The Home Appraisal Process

The home appraisal gives a home valuation expert the chance to evaluate the home a buyer’s considering to determine its market value. Home appraisers are highly trained, state-licensed professionals that know how to evaluate homes and assign value to them.

The appraiser will use various approaches to determine the final appraised value. The appraisal typically happens after an offer on the home was approved but before the lender loans the money.

The Appraisal And Mortgage Approval

The appraisal is one factor that a mortgage lender considers when deciding whether or not to approve a final loan request. Even if a borrower had preapproval, a low appraisal could cause the mortgage to fall through.

Why is this? A lender only wants to lend enough to cover what the home's actual value, and if the appraisal comes in lower than what the borrower is asking for, the lender can deny the loan.

If the lender does not deny the loan completely, they may refuse to lend more than the home’s value. In order to buy the home at the agreed price, the buyer may need to come up with the difference in cash at closing.

What Can Buyers Do If The Appraisal Is Low?

If an appraisal comes in low on the home someone wishes to buy, the buyer shouldn't panic. It is possible to get a new appraisal at a higher value.

First, consider the condition of the home. Did the seller let some things fall into disrepair? If the seller fixes those items, a new appraisal may be higher.

Does the home look rundown or cluttered? This shouldn't affect the appraisal, but it can sometimes cause the appraiser to trend lower. Sometimes, simply asking for a second opinion might get a slightly different appraised value.  That said, if the appraisal is low, make sure to evaluate the purchase price. Is it in line with current market conditions and the overall condition of the home?

If the answer to that question is no, then the offer may be too much for the home. The appraisal, in this case, gives the buyer the opportunity to reevaluate the purchase decision.

When it comes to mortgage approval, the appraisal is one of the critical steps in the process. If a buyer has shopped wisely, the home should pass with flying colors, and soon the home sale process will be over.  As always, your trusted real estate professional is the best resource for appraisal information in your local market.

How Can I Improve My Home's Value?

Buyers generally seek the least expensive home in the best neighborhood they can handle.

Like the person in the video says, you want to present a home that fits in the neighborhood but doesn't stand out too much. For example, if neighbors are all 4 bedrooms, 3 baths and 3000 square feet additions that make your home 5, 4, and 4000 will make yours harder to sell.

Improvements should make it show well and fit well in the neighborhood. Last-minute capital investments in large structural changes arent likely to pay off. But cosmetic upgrades like paint and landscaping help a home show better and often do pay off. Of course, all systems and appliances should work to get a top price.

To make your home competitive and attract buyers and bids work with a professional real estate agent and start early. Call me today at 404.918.2500.

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The 'Must Have' List: Why Deciding Your Must-Haves Before Viewing Homes is a Great Idea

Knowing what you want before you start looking is a big help when house-hunting. Giving the list of 'must-have' items to your real estate professional a few days before you begin touring listings is a great idea because they can find homes that meet as many of your criteria as possible.

It also helps on a more personal level, since being organized and knowing what you want will help you quickly identify whether or not homes meet those standards.

Is it a 'Must-Have' or a 'Nice-to-Have'?

The debate between "I need it" and "I want it" is as old as time. Thinking back to childhood, when the desire for a cookie was met with mom's stern "not before dinner," some children seem to develop a magical ability for reasoning that voiced a desperate need for cookies before dinner, but mom was never fooled. The same goes for the 'must-have' list for your home search.

There are items that you want and certain 'deal breakers' that you cannot live without. An absolute 'must-have' might be proximity to work or certain schools, whereas desirable features could include a shed or a built-in barbeque pit. Knowing the difference between something you want and something that is absolutely required can save you a lot of time and money.

How to Organize an Effective List

Write down everything your dream home would have, then ask yourself how necessary each item is. Rate them by priority, whether an absolute requirement, something you would definitely prefer, something for which you would consider a compromise, and something that you don't really care that strongly about. That first group is your 'must-have' list. The second is your 'nice-to-have' list, which is a great guiding star for choosing between homes that meet all of your 'must-have' items.

Some Suggestions for a Great List

Location, location, location - The top of any good 'must-have' list should be location. No matter what else is changed in a home, the location will always remain a constant. Decide what you want to be close to or far away from and make sure the grounds and neighborhood are all acceptable.

Bedrooms and bathrooms - Does everyone need their own room? Do you need a guest room? Could everyone share one bathroom? Ask yourself what you need at a minimum to facilitate everyone in your home.

Energy-efficient windows and good insulation - It may seem technical, but an energy efficient home can save you a lot of money in the long run. Don't let money seep through a poorly insulated home.

Space for pets - Not everyone has pets, but for those who do it is a good idea to think of them in your 'must-have' list. After all, your new home is going to be Fido's new home too! A fenced yard or a dog run might be a good idea, but also consider whether the space would allow you to add your own later.

Call your real estate professional today to start house-hunting, and don't forget your new list!

Summer's Coming: Why Adding a Pool to Your Home Can Drastically Increase Its Value (And Its Fun!)

Value is defined as the importance, worth or usefulness of something; to estimate the monetary worth of something. When the subject is a home, and what adds value to it, then breaking it down into its most common denominator is necessary.

A family looking for a home decides that it has enough space, that there is room to expand perhaps, and that the home would be handy for entertaining guests. Adding a pool to the mix greatly improves the form and functionality of a home. Below, we'll explain why there are few home renovations or additions that add more value than a swimming pool.

Pay Attention To The Area

Both HGTV and Better Homes and Gardens agree that homeowners make an error in adding a pool when the area or region is not supportive of pools. Homeowners living in hot humid climates and with pools all around them will benefit from the addition of a pool - but would you install a swimming pool in Alaska? In warmer climates not only will a pool be cool and fun on a hot summer day, but it will be worth something to the next buyer.

Those living in areas not so warm and muggy would only benefit from the addition of a pool if the neighbors had one - a phenomenon known as the 'social proof' effect. Regardless, the National Association of Realtors, or NAR, reports that pools add 7.7 percent to the average property value. The figure jumps to 11 percent for hot humid areas, so if you're in a humid area, installing a pool might be a worthwhile expenditure.

Outdoor Renovations Are A Hot Trend

The outdoors has made a comeback whose scope is unbelievable. The popularity of outdoor rooms, cascading decks, patios with pergolas and landscaped walks bears this out. Homeowners are adding trendy outdoor rooms in addition to lush landscape, hardscape and water innovations for many reasons:

- Enjoying nature reduces stress

- Families are spending more time together

- Networking is more fun over a burger than over a phone

- Many outdoor rooms are sustainable

Few will argue that these points are important. A high-quality pool can serve as the focal point for a yard or greenscape. Many homeowners build pools to highlight the architecture, for example, with stones and waterfalls to complement the landscape. The object is to make the whole package useful and worthy to the next buyer.

In Short: A Pool Will Lead To An Increase In Value

Factors vary in calculating the pool's effect on property values. The size, a diving pool vs. a play pool, the configuration, (i.e. square, oval, kidney-shaped, etc.) and the extent of the landscaping and decking are such factors. Appraisers reflect that a pool will add between 10 and 30 percent to the home's resale value.

Folks love a pool for swimming any time they wish, in the privacy of their home. For some, that alone is the only impetus they need to add a pool. Other buyers appreciate a pool because of the enjoyment it brings their children. Thus, value and applicability are much the same.

A qualified real estate agent can help you determine how much value a new pool will add to your home. Contact your agent before making this investment to ensure it will prove worthy.

How To Attract High-End Buyers For Your Home For Sale

There's at least one good thing about the drop in the dollar and it's boosting the real estate market. Many high-end Europeans are now looking toward the U.S. for a vacation home or permanent residence, and that could mean big hope for your home for sale. However, this also means a different way of selling.

Stage A Benefit

No open house for high-end buyers. Host an event instead - maybe even a benefit dinner for a worthy charity. Let people come and view the property, but give them an avenue to mix and mingle as well. In addition, they get to see how the house handles a bunch of guests.

Showcase A Chef

If you have a gourmet kitchen (or two), check with chefs that would like to showcase their cooking abilities. This creates an entire "house-buying" experience for your guests. Again, they see what the featured kitchen can handle as well as being able to enjoy the culinary arts of a professional chef.

Host A Private Tour

If your home has beautiful gardens and a large landscape, add a private concert or tour of the gardens. A wine cellar and large sitting rooms can turn the event into a stylish wine tasting event.

The biggest trick in attracting high-end buyers is showing off the house's best features. If the event is hosted at night, you can show how attractive the home is with an overall "candlelight" appearance. You might even go so far as to set the time for when the sky is at it's best and frames the home just right.

First impressions are everything, so pull out all the stops. Don't let any great feature go undiscovered, from indoor swimming pools to music rooms and manly dens. Let your home shine!

What's Your Home's Real Value?

As a society, it seems like we've gotten away from appreciating our homes for their emotional and sentimental worth. Instead, we focus solely on their monetary value. 

An Appraiser Can Estimate A Home's Monetary Value, But To Gain A True Concept Of Your Home's Worth, You Must Also Take Into Consideration:

1. Pride Of Ownership. You don't buy a pair of Prada shoes because you're going to be able to resell them and make a profit. You buy them because they make you look good and feel good.
2. Security And Stability.Your home provides a roof over your head that's in your control. You can decorate it how you want. You don't have to worry about a landlord selling the property or asking you to move out. In the "olden days" (or should I say "golden days"), we called our homes our castles because, as owners, we felt like the kings and queens of our homes. You can still feel that way! Claim your castle and crown yourself king or queen today.
3. A Safe Haven.After a tough day at work or a day of disappointments, where's the first place you think of going?  Home! As Dorothy says, "There's no place like home."
4. A Place To Make Memories.  Your son's tree house and daughter's playhouse. The markings on the wall that tracked your children's growth. The porch swing where you start and end every anniversary celebration.    
5. A Neighborhood Full Of Friends. In the event of an emergency, your neighbors are your first line of defense. They're also the simplest, best and least expensive form of security. Additionally, they may have the exact tool you need for a project; the extra pair of hands you need to complete a project or children to become playmates with yours. Neighbors also give you that much needed in-person, up-close social network.

Even if your home's economic value has dropped, you continue to benefit from its emotional values of community, stability, security and success.

Thinking of buying a home? I can help you evaluate the emotional and monetary worth of homes and find a home that fits your values and lifestyle. Give your trusted real estate professional a call today.

A Few Reasons Why That Extra Bedroom Might Be Worth It

So you are looking at buying a home, but you are wondering whether or not it is worth it to pay a little extra for a home with one more bedroom.

It's a tough decision to make, especially when balancing other factors such as location and the other features of the home. However, having one more bedroom than you think you need could end up being a good thing for a number of reasons.

Expanding Family

Perhaps you only planned on having two children, but a third one might come along as an unplanned surprise... will you have enough room for everyone?

One of your children's friends might have a bad home situation and need a place to crash for a while. One of your elderly parents might need to live with you for a while.

There are many situations when the family living under your roof might expand, (even if it's just having guests over the weekend) so make sure that you have the space to accommodate.

A Home Office

If you are working from home or have your own business, a private space in the home to work can be worth its weight in gold. It's really difficult to be productive when you are trying to work at the kitchen table with the rest of the family buzzing around you, so turn your extra bedroom into a home office.

Rental Income

An extra bedroom might be a great source of income, especially if it can be turned into a basement or attic suite. As long as you don't mind the responsibility of being a landlord, you could rent out the room to a tenant and let their rent help you cover the mortgage payment.

Resale Value

Buying a slightly larger house with one more bedroom means that the home will be easier to sell in the future. This is especially true if all of the other homes in the area have similar amounts of bedrooms.

These are just a few reasons why an extra room can really come in handy. If you want to know more about home buying, you can contact me, your trusted real estate professional, today.

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.

~ Ed Short, Atlanta REALTOR®

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Can That Killer Home Theater Add Value To Your Home?

Many home owners dream of having a home theater - an entire room of the home dedicated to enjoying television and film. These rooms are usually equipped with a large flat screen television or projector, comfortable seats, mood lighting and perhaps even a bar or a snack fridge.

They are very comfortable and the perfect place to relax after a hard day. They are also lots of fun for entertaining, as you will be able to watch the big game or the hottest new release with your friends in style.

However, will spending the money on renovating your home to create a theater room be a smart investment? Does this type of home improvement add a lot of value to the property, or will it turn off potential buyers?

Buyers Interested In Tech-Equipped Homes

These days, luxury home buyers are becoming much more tech-savvy and they are demanding more networked or 'smart' homes than ever before. They are looking for a house which is outfitted with the latest in technology, so a modern home theater will be a desirable selling point. If you are targeting your home to this luxury market, the home theater could give you an edge over the competition.

It is difficult to determine the amount that the home value is affected when you add a high tech home theater, but most real estate professionals will agree that when there are many houses for sale at any given time, the one with an impressive home theater room will be more likely to sell first.

Don't Take Over Valuable Home Space

The only situation in which the home theater could detract from the value of the home is if it overpowers a medium sized or smaller home that just barely had enough space in the first place. If your home cannot spare the extra room, taking up a lot of space with a home theater will mean fewer bedrooms or living spaces and a potential decrease in value.

However, you might be able to get around this problem with clever solutions that allow you to conceal the home theater unless it is being used. You could hide the large screen behind specially designed cabinets and set up the furniture so that the room can be a living space when not in use as a theater.

Remember that a home theater system is something that will generally only increase the value of your home for certain buyers, as opposed to something like a bathroom renovation or a garage which will be valuable to almost every buyer.

To find out more about upgrades that affect the value of your Metro Atlanta home, contact me today.

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.

~ Ed Short, Atlanta REALTOR®

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What To Do When Your Home Doesn't Appraise At Its Purchase Price

Experienced home sellers in Metro Atlanta know that reaching a sales agreement with a potential buyer can be just the start of the negotiation process. There are often inspection issues to resolve, among other items.

One particular negotiation point which can present difficulties for both buyers and sellers is when a home's appraised value falls short of its contracted sales price.

Sometimes, this happens because the home's price was inflated. Other times, it's the result of a faulty appraisal.

As a home seller, there are some common appraisal problems of which you should be aware. Here are some of them, and how to seek remedy so that the home sale process remains smooth.

Inaccurate comparisons

An appraiser will assign your home's value based on comparable properties and recent sale prices. However, some homes -- notably those in foreclosure; sold via short sale; or which were abandoned -- sell at a discount as compared to non-distressed properties. An appraiser may want to ignore these types of comparable homes, or make proper valuation adjustments.

Ignored market conditions

The housing market can improve quickly as we've seen in some U.S. markets since 2011. Appraisers, though, may not consider a local market's demand and its rapidly rising prices -- especially after the recent downturn from last decade. If an appraiser is not taking into account such information as multiple offer situations, low local inventory, and days on market, your home's appraised valuation may be affected.

Slow turn-around time

Appraisers operate under strict time guidelines. When an appraisal takes more time than usual, therefore, it's often the result of the appraiser's uncertainty on the home's value. This is a common scenario for unique homes for which comparable properties are scarce. It can also be the case for when an appraiser is unfamiliar with your area. If an appraisal takes an inordinate amount of time to complete, consider asking your REALTOR® to review the figures.

To err is human and appraisers make mistakes occasionally. How you handle those mistakes as a seller can be the difference between a sold home and a canceled contract.

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.

~ Ed Short, Atlanta REALTOR®

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