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February 27, 2017
Appraisals are an important part of the home sale process, but many people don’t understand what an appraisal involves or why it’s such a critical part of buying or selling a home. Today, let’s look at some common questions—and answers—about the home appraisal process.
What is an appraisal and who creates it?
An appraisal is a written estimate of the value of a home, created by an unbiased, third-partyappraiser – a person with experience establishing the value of houses, who has no connection to the buyer or the seller.
Most appraisals are conducted by licensed appraisers familiar with the area and market in which the house is located.
Why is an appraisal needed?
Lenders use appraisals to evaluate the amount of the loan they are willing to make, either as purchase money for a home or in refinancing. The appraisal serves as proof of the house’s value, which impacts the amount of money a bank or other financial institution is willing to lend, and at what price.
How does the appraiser determine the value of a home?
Appraisers consider numerous factors when evaluating a home. They look at the house itself, including its age, condition, curb appeal, and other relevant details. They don’t care about moveable things like furniture and art on the walls, but do pay attention to fixtures like sinks and toilets, especially if those fixtures need repair. Appraisers also review recent home sales in the neighborhood, paying special attention to the ones most comparable to the house they are appraising.
Homes in better condition appraise for higher values than those that look run down, ill-maintained, or in need of significant repairs.
Who pays for the appraisal?
In the case of appraisals associated with mortgages or purchase money loans, the buyer often pays the appraisal fee as part of the closing costs. When the appraisal relates to a refinance, the person obtaining the loan (usually, a homeowner) is responsible for the fee. However, like many other parts of real estate transactions, the cost of the appraisal may be shifted to another party, depending on the terms the parties negotiate among themselves.
Appraisals are an important part of buying, selling or refinancing a home. They help establish the value of the property and the amount of the loan a lender is willing to offer. In addition, buyers can sometimes insert language into the purchase contract requiring re-evaluation of the purchase price if the home does not appraise for at least the value the buyer and seller agreed upon.
Although appraisals are a common part of the purchase and sale process, not every sale is contingent upon the house appraising for a certain value. Selling a home to investors is a shorter, less complicated option that may not even involve a formal appraisal. To find out more, click here and get a free, no-obligation quote from 4 Brothers Buy Houses today.
February 18, 2017
Open houses offer prospective buyers a chance to view, and consider making an offer on, your home – but slip and fall injuries can ruin a buyer’s impression of even the loveliest homes, and may even land the seller in litigation.
Here are some tips to help prevent slip and fall injuries during a winter open house:
- Shovel, Salt, & Sand All Paths & Driveways. Clear away snow and ice from driveways, sidewalks, and paths around your home—and remember to clear the sides and back of the house as well as the front approach. Put down salt or sand to increase foot traction and help prevent unwanted slips and falls. Visitors often want to walk around the outside of a house and tour the backyard area, so make sure to clear and prepare a path where buyers and real estate agents can walk safely.
- Place Absorbent, Non-Slip Mats Near Entrances. Winter snow and ice can melt into slippery puddles in the entrance, creating hazardous conditions for visitors to an open house. Protect your guests by offering absorbent, non-slip mats near entrances—both front and back—to help prevent mud and puddles from accumulating.
- Post Warning Signs in Steep or Slippery Areas. Warn visitors of hazardous, steep, or slippery surfaces, especially slopes and stairs. Post warning signs, especially when a surface is steeper or more slippery than it seems.
- Clean Up Puddles Promptly. Melting snow and ice become slippery puddles in entryways, and other parts of the home as well. Don’t wait until after the open house ends to clean them up. Keep cleaning supplies on hand, and mop up water, mud, and slippery tracks as soon as possible to keep your visitors safe.
- The Brighter, the Better. Well-lit, welcoming homes sell better in any season, but bright lighting also helps prevent injuries during winter open houses. Use strategic lighting to illuminate your home’s best qualities . . . and also to keep potential buyers safe!
All of the other safety tips for open houses are important during the winter too: clear away clutter, have at least two people monitoring the open house whenever possible, and put jewelry and other valuables in safes (or remove them from the property altogether). A little common sense and preparation can help keep your home, and your visitors, safe and reduce the risk of slip and fall injuries during your open house.
February 10, 2017
“Foreclosure” is the legal term for the process lenders use to recover the unpaid amount of a loan from a borrower after the borrower violates the terms of a loan agreement.
What Kind of Borrower Violations Trigger a Foreclosure?
Normally, the borrower’s “violation” takes the form of non-payment, meaning the borrower has stopped making payments on the loan or fails to make payments in the amounts or at the times required by the loan agreement.
While many lenders will negotiate with borrowers, in hopes of getting payments back on track, if the negotiation fails—or if the borrower misses additional payments—the lender may decide to foreclose on the loan. Where the loan is secured by a mortgage or a deed of trust on the lender’s home, the lender pursues foreclosure proceedings in an attempt to recover the loan by forcing a sale of the collateral used to secure the loan – in this case, the borrower’s house.
What Happens Once Foreclosure Proceedings Start?
The exact foreclosure process lenders must use is controlled by a number of laws and regulations, some of which vary from state to state.
However, most foreclosure proceedings involve four different phases:
- Pre-Foreclosure/Notice of Default. This phase begins when the borrower misses payments. The lender will send the borrower notices about the missed payments and indicating that the borrower is in default (or in danger of a default) under the loan agreement. The lender may also file notices with the county recorder or post a notice on the door of the borrower’s home, to make sure the borrower knows that (s)he is in danger of a foreclosure suit.
- The Redemption Period. After receiving a notice of default, a borrower has a period of time – normally 1-3 months – to pay off the overdue amount of the loan, to sell the home, or otherwise to bring the property out of default. While lenders will sometimes negotiate arrangements with borrowers during this period, it’s dangerous for homeowners to let a loan go this far into default.
- Sale by Auction. If the homeowner fails to cure the default or sell the home before the end of the redemption period, the lender arranges an auction (either directly with the county assessor or, where necessary, after appropriate legal proceedings) and the house is sold, normally to the highest bidder – who then becomes the new owner of the home.
- Right of Redemption. In some states, the law gives borrowers who default on a loan a certain period of time to “redeem” the property—even after the auction sale—by paying back the entire remaining amount of the loan, plus the lender’s costs and interest. The redemption period varies by location, as do the terms the borrower must comply with to redeem the home.
- Eviction (if Necessary). After a house is sold in a foreclosure auction, the lender will give the borrower another notice, stating how long the borrower has to vacate the home. If the borrower fails to comply, the local sheriff will evict anyone remaining in the house after the stated date.
Foreclosure proceedings are stressful, and can be scary, especially if you find yourself in a position where the loan is due and you lack the funds to pay. If you need to sell a home quickly—either to avoid foreclosure or for any other reason—consider selling direct to an investor, to avoid the hassle and delay of open houses, long escrow times, and requests for repairs. To learn more, click here for a free, no obligation quote from 4 Brothers Buy Houses.
This article is for information purposes only; itis not and should not be taken as legal advice. If you are facing foreclosure, contact a legal specialist in your area for a consultation about your legal rights.