Establishing the fair market value of a piece of real estate is a crucial step in any home purchase involving a mortgage. Buyers can always perform due diligence with the assistance of real estate professionals, but they typically have no choice in the matter if they borrow the money to buy the property.
Depending on the lender that you work with and the type of property you purchase, it is possible that you may need to pay for an appraisal, an inspection and a survey before you can head to closing and actually buy the property. Why would you need all three of these professional reviews? All three professionals perform different roles.
An Appraiser Gives Fair Market Value Of the Property
To put a fair and appropriate price on a piece of real estate, a buyer or lender typically needs to look at the objective facts about the property and sale records for similar properties nearby. Formal appraisals help ensure that the lender does not extend more financing than they will be able to recoup if the buyer defaults on their loan.
An Inspection Ensures The Condition Of Crucial Home Equipment
The major equipment in house play an important role in how much the property is worth. A home with many updates and new appliances, fixtures and mechanical systems will command a much higher price than a property in desperate need of upgrades and maintenance.
An inspector is a real estate professional capable of determining the condition of crucial equipment and systems in the home and producing a report about concerns and repairs necessary for the transaction to move forward.
A Survey Is Necessary When There Are Questions About Boundaries or Acreage
The buildings or improvements on a property aren't the only things that influence its value. The land itself can be worth quite a bit, especially if there are multiple acres involved. When the lender needs to validate the size of the parcel or when there have been changes to the boundary or disputes about it on record, the survey may be necessary to formally establish the boundaries and validate the price paid for the property.
Understanding the reasoning behind different expenses you incur while buying a home will make the closing process less frustrating for you.
Hayes Legal Solutions, PLLC is here to help you have a better understanding of all these processes. We provide in-depth consultation on all these for our clients that engage us for flat free residential real estate home buying or selling services.