Higher Wake County Home Appraisals Are Typical of Refinances and HELOCs

Appraisals Can Be Higher On RefinancesAs I continue with this next piece in my series on appraisals, we will now take a closer look at other anomalies in the process: Refinances and Home Equity Lines of Credit.

Many times I meet with Wake County sellers who previously had their home refinanced or had taken out an equity line of credit and they will proudly present me with a copy of that appraisal. They do this so that I can see what the opinion of value for their home was back then. In almost every case it’s a higher appraisal versus a realistic sales price for today. How can that be?

Familiar Risk Is the Best Kind

Again, it all boils down to the amount of risk to the lender. When you went to your bank and asked them to refinance your Triangle area property or give you an equity line of credit, they immediately know your pay history. They can look into their records and see that you’ve paid on time so a lower interest rate on the refinance is a very low risk.

Your bank is in the business of loaning money and they will do their best to give you what you want. Helping you actually helps them keep a good paying customer in their book of business. Considering the reality of foreclosures, it behooves lenders to do whatever it takes to retain the loyalty of the better paying customers.

With a refinance or equity line of credit, the bank will allow the appraiser to know the number you both need to hit. They are very likely to let the appraiser be more generous with their adjustments and their opinion of value. They may even allow them to go outside of a geographical area or further back in time to hit the number you need.

Fair Warning to Wake County Home Buyers!

Because of the cost incurred for a refinance, which is typically added to the loan amount or paid out of pocket by the borrower, don’t refinance unless you can get an interest rate at least 1% lower than you have now.

You want to also be sure to look for lenders who offer no-cost refinances. Another helpful hint is to not refinance if you feel you’ll be moving in a year or two. Not unless you’re going with a no-cost loan. However, even those may have a pre-payment penalty if you do not keep the loans for a specific amount of time so read the terms closely.

If paying out of pocket be sure to calculate the cost of the refinance against the savings per month to determine how many payments it will take for you to break even. On average, it’ll take about 3 years. This is another reason to look for no-cost refinancing lenders.

Reduce Your Own Risk

At this point in the series, we’ve learned that both the bank as well as the appraiser will do whatever they need to as a means of reducing risk. One of the best ways that you can do the same and protect yourself is to avoid going through the home buying process alone or with a less experienced agent.

We at Linda Craft & Team have connected thousands of Wake County area buyers with their new homes with as little worry as possible. If you’re in or around the Greater Triangle area and still searching for your new home, contact us and let us partner with you to get you there.

Have a great day!


How Staging Your Wake County Home Affects the Appraisal

The Appraisal Value of Your HomeLast week I discussed on my blog and television segment how to better understand and navigate the appraisal process. Over the course of the next few weeks I’ll post a series of tips on what you can do as a Wake County home buyer to further help your chances in coming out of the process with a favorable result.

Remember, the goal of an appraisal isn’t to truly determine the value of your home. It’s to help the bank determine if the home is worth the total loan amount requested by you. Having that basic foundation of understanding is what we’re going to build on to help give you an edge in this process.

Staging your home will go a long way in helping to boost the appraisal figures.

An Appraisal Is An Opinion

An appraisal is an individual’s opinion of value. You could have 10 appraisers conduct an appraisal on the same property and you will find all of their opinions will vary to a degree. Square footage may vary. Comps used could vary. Adjustments for differences between homes may vary. The commentary on each comp may also vary.

Some of the variances can be attributed to differences in things such as the comps that were used. Because appraisers aren’t robots, there is also a possibility of human error in the appraisal. A simple typo on a figure or an incorrect listing of how many bedrooms or bathrooms are present (for example) can dramatically affect the figure the appraiser arrives at.

Show Up and Show Off

A key point to keep in mind is that because an appraisal is an opinion, the more positive an appraiser feels about the property, the higher the value will be. Like I said before, remember that they’re human. This is actually an advantage because it means they can be swayed by their senses.

You can help your value by making sure on appraisal day you have a clean, neat home that is well-staged to maximize emotional appeal. Turn the lights on, burn a scented candle, and do all the things you did to capture the buyer’s heart. This is important because you still have one more heart to win over: the appraiser.

It may seem trivial, but, I assure you it is not. If your home isn’t presentable when the appraiser arrives, it may have a very detrimental effect on how they “feel” about the value of it.

Don’t Go It Alone

The home buying process can be quite a task if you try to navigate the seas alone or with an individual agent. Here at Linda Craft & Team, we have years of knowledge and experience in the Greater Raleigh real estate market and we are ready to partner with you.

For more information about the appraisal process please feel free to reach out to us. If you’re still searching for your new home, take a moment to browse through the thousands of listings we have for the greater Triangle area and once your new home leaps out at you, we’ll be here to introduce the two of you.

Have a great day!