Closing costs – appraisals

Metro Detroit mortgage closing costs.

You are getting ready to buy a Metro Detroit home and you want to know about closing costs.  It doesn’t matter whether it is a $50,000 Redford home or a $800,000 Northville home the bank wants to know what the house is worth.  Think of it this way.  Would you loan money to a stranger without collateral.  You want something to back up the money you are loaning.  The bank wants to make sure the Metro Detroit home is worth what they are loaning.  That is the reasoning the banks want an appraisal.

What an appraiser does is look at homes that are similar to the one you are buying.  They compare ranches to ranches.  Colonials to colonials.  Tri-levels to tri-levels.

The appraiser looks at all Metro Detroit real estate and homesthat sold in the last six months that are close to the home you are buying.  They usually want homes that are within a square mile of the home you are buying.  Homes that are in the same subdivision if possible.

The appraiser looks at what your home has and what the other homes have.  They might be comparing a 3 bedroom to a four bedroom.  Or a two car garage to a one car garage.  Or a 3200 square foot home to a 2900 square foot home.  They have subtractions and additions to the market value.  They try to come up with a fair market value of the Metro Detroit home you are buying.

It is not an exact science.  Different appraisers may come up with different value for the same home.  Some of the reasons this may happen is because different appraisers may use different comparable houses, and may use different value adjustments.

Appraisers charge anywhere from $300 to $450 for an appraisal on a single family residence in the Metro Detroit area.

The biggest thing to remember is that if the appraiser says the house doesn’t appraise.  Run.  Don’t let your realtor get more comps for him.  They are doing you a disservice.  If a house does not appraise for purchase price.  It means that the house is not worth it.

To search Metro Detroit homes for sale click on the search for homes button above.  Or email me at info@RussRavary.com for your local foreclosure list.

 

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