Dear Michael: Who pays for the Home Appraisal, the buyer or the seller?
Answer: The appraisal, or estimate of the value of the home being purchased, is an integral component of the mortgage process. An appraisal is required in most types of mortgages. Without it, buyers cannot obtain a loan. In the vast majority of mortgage situations, the buyer pays for the homes appraisal at the time the original loan application is completed. Appraisal fees typically range from $400 to $500. Once paid, the appraisal is performed by an independent professional appraiser who inspects the home’s size, location, condition, quality, and function. The appraiser produces a comprehensive report based on his/her visit and studies the sale prices of similar homes in the same area in order to establish a value of the home being appraised. Comparisons of the square footage, physical appearance, amenities, and overall conditions are made. The value of the home can be adjusted higher or lower based on the prices of similar homes selling in the area. Both lender and buyer will look over the report. The lender decides how much money is too much to lend given the property’s worth; the buyer discovers how much is too much to pay for the home. An appraisal that is lower than the maximum amount the lender is interested in financing will block the issuance of the loan unless; the seller lowers the price of the home or the buyer increases the cash down payment. This outcome can re-open negotiations for the home purchase. While appraisals are not error-proof and the numbers may be susceptible to negotiation, an appraisal that is substantially below what a buyer has offered to pay for a home may be an indication that the buyer may be paying too much.
Dear Michael: How much does it cost to have a professional stage my home? And is it worth it?
Answer: One of the hottest trends in selling a home in todays market is home staging, an interior decorating technique for making the most of your home’s attributes and making it more attractive for any potential buyers. Home staging has been known to increase home sales prices especially for vacant homes or homes that are in dire need of new furniture. Staging can shorten the amount of time a home stays on the market. But your question is: What is the pricing for home staging-and is it worth it? Pricing runs at about $5,000 for about 3 months. According to www.StagedHomes.com, a leader in home staging services, statistics show an average increase of 3% in final sales price on homes that had been staged, compared to those which had not. If you’re willing to pay up front for staging cost, you will find out that the benefits from staging your home outweighs the home staging cost.
Dear Michael: How does a lender decide how much I can afford and what loan I qualify for?
Answer: The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car, student loan payments, alimony, or child support. According to the Federal Housing Administration, monthly mortgage payments should not exceed more than 33% of your gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.
Michael Kayem is a Realtor with Re/max Estate Properties serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or e-mail them to him at: homes@agentmichael.com
