The North Jersey housing market is still hot, and many cash buyers are waiving their home appraisals. But there are many reasons why a home appraisal protects you and this most important investment.
You’ve finally gotten here. You have enough money to pay cash for your dream home. It feels great being able to afford a home without the need for financing or mortgage loans. In New Jersey, the housing market is still a hot seller’s market and when it comes to buying a home, time is of the essence. You don’t want to get into an aggressive bidding war, so you might also be tempted to waive the appraisal. But there are numerous reasons why you shouldn’t skip this important step.
What is a Home Appraisal?
A home appraisal is a professional evaluation of a home’s value. A licensed, trained appraiser will assess a house and take several different factors into consideration when calculating the home value.
Appraisals are helpful to homebuyers who want to make sure the price they’re paying is justified. You may want to include an appraisal contingency in the sales contract; this clause lets you walk away from a home purchase if the appraisal comes in too low to justify the agreed-upon purchase price.
Banks and mortgage lenders use the appraised value to determine the highest mortgage amount they are willing to loan a borrower, to ensure that they are not financing an overvalued asset.
Factors that go into a home appraisal
- Location / neighborhood
- The year the home was built
- Roof, floor, wall, and other construction materials
- Bed/bath total
- Square footage, number of stories
- Foundation, basement, attic features
- Off-street parking, driveway, garage, etc.
- Comparable homes and the overall housing market
Items that can affect an appraisal
- Home location, curb appeal, neighborhood
We’ve all heard the phrase “location, location, location,” but that’s because it’s one of the most important factors in determining your home’s market value. Appraisers are looking for features such as neighborhood amenities, schools, quality of roads, walkability, etc.
Curb appeal is the first thing that potential buyers see, so if the outside of your property is unkempt, it could affect your home value. Upgrading your landscaping can help to improve your appraisal value.
You can’t control who you live next to, but your neighbors could still affect the value of your home. Appraisers will check out the other homes in your neighborhood to help determine your property’s value. If your neighbor’s home is visibly more well-maintained than yours, it could hurt your appraisal. On the flip side, unruly pets, unkempt yards, noisy inhabitants, or poorly maintained property could also drive down your property value.
- Maintenance, cosmetic updates, renovations
Maintaining a home is expensive and time-consuming, but neglecting standard maintenance can become a costly problem, and it can affect the value of your home. Therefore, ensuring that your home is clean and well-maintained can go a long way in improving your evaluation. Odors like cigarette smoke, pet smells, or mildew may also be a factor.
Keeping your home updated and well-preserved can go a long way in making it a desirable property for potential buyers. Outdated appliances, fixtures, and cabinetry may also negatively affect the marketability of your home. Be careful of making too many home renovations though, as some will not deliver a return on investment.
Other reasons to get a home appraisal
Appraisals can be used for other purposes:
- Before selling your home to gauge appropriate asking price
- Before refinancing your home
- Before applying for a home equity loan
- Applying for other loans
- Appealing tax assessments
Are home appraisals required in New Jersey?
In New Jersey, home appraisals are required for buyers who are using a mortgage loan. Lenders want to make sure that their investment is worthwhile. After all, the home is being used as collateral for the loan. Determining market value is beneficial for both the buyer and the lender.
Even though appraisals are not required in New Jersey for buyers paying in cash, an appraisal will give you and your family an idea of what the home is truly worth.
Buying a home is a big investment. You and your family will potentially be putting hundreds of thousands of dollars on the line for your dream home. You want to make sure that you are making the right decision. The real estate professionals at CENTURY 21 Cedarcrest Realty will assist you throughout every step to ensure your home buying transaction is as smooth and pleasant as possible. We work with home buyers and sellers throughout Essex County, Passaic County, and North Jersey; come into our offices in Caldwell or Little Falls to start your journey!