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If you are buying a home, one of the key components to securing financing will be the appraisal of the property you want to buy. The bank needs to confirm that you are buying the home for a reasonable price and that if they needed to sell it because of foreclosure, they could get their money back.
The appraisal is based on the establishing the fair market value of your home. This means assessing the square footage, any important features of the home, like fireplaces, garages, bathtubs, number of bedrooms and the lot size and then comparing your home to like homes that have sold in the area. Obviously it's far better to have your home appraise higher than the price at which you are buying. If the appraisal doesn't meet the standards of your lender, you may be in for a headache.
In some cases you can renegotiate the price with your seller, but in many cases you are just out of luck. One way to ensure that you won't lose your deposit is to make a note in the purchase and sale agreement that you can back out of the deal if the house does not appraise properly. Do your homework and look at properties in the area - this will help you make sure you're choosing the right home and getting a good value.
|Sheri Ann Richerson|