Agricultural Loan Officer Job Description – An appraisal is an essential step in the home buying process. Appraisals let buyers, sellers, and lenders know how much a home is worth and are designed to prevent buyers and lenders from paying too much for the property. Appraisers will consider a variety of factors to determine a home’s value, including size, condition, location, number of rooms and comparable sales in the area.
The evaluator must be an impartial third party with no interest in the outcome in order for the evaluation to be considered fair. As long as the appraiser determines that the home’s value is equal to or greater than the asking price of the home, the sale can proceed. If the home appraises for a low value, this may slow down or stop the process.
Agricultural Loan Officer Job Description
Understanding loan estimates is key to identifying and avoiding over-inflated estimates. In this guide, we’ll discuss the loan evaluation process, who applies, what red flags to watch for, and more:
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The seller, buyer, real estate agent, homeowner, or lender can all request an appraisal because all parties have an interest in determining the value of the home. However, each person’s reasons for requesting an evaluation may be different:
Appraisals may be requested multiple times to negotiate the best deal. Although homes typically do not require multiple appraisals, any of the three parties involved can request additional appraisals if deemed necessary.
Depending on the size and complexity of the home, the appraisal may take less than an hour or several hours. An appraisal is also the first step in the process of completing a purchase or sale transaction. You may even need an appraisal on a home that hasn’t been built yet.
During this step, a professional appraiser will carefully walk through the property, inspecting the condition of the exterior and interior with the goal of determining fair market value or a fair range of value. They will note anything that negatively affects the value of the property. For example, if your home needs repairs, this could have a negative impact on the value of the property. Assessed value is the price a property should sell for on the market.
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For purchase and sale transactions, the appraisal fee is usually paid by the borrower and can cost several hundred dollars. An appraisal may also be requested as part of a refinance transaction to ensure that the lender will not lend the borrower more than the property is worth.
The appraiser should be certified or licensed, familiar with the local area, and impartial and not involved in the sale. The appraiser should have certified experience appraising similar properties in the area. To complete the process, the appraiser will look at:
Appraisers will not inspect the condition of the furniture, the cleanliness of the home, or the performance of the heating and cooling systems, although they will check that the furniture is in place and working properly. The appraiser focuses primarily on your home’s permanent fixtures and the condition of these features.
After the appraiser completes the appraisal of the property, he will provide conclusions and analysis based on the observations. In their reports, appraisers must include a sketch of the exterior, an explanation of how the home’s square footage is calculated, a road map showing the property being assessed and the comparable sales used in the appraisal, photos of the front exterior of each comparable property, and views of the front, back and street views of the home. Photo.
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The report should also include other relevant information the appraiser uses to determine the home’s fair market value, such as public land records, market sales data, and public tax records.
The appraisal must provide the true value of the home, which is why it is such an important step in the home buying process and why the appraisal must be accurate. If the home appraises at or above the asking price, the deal can proceed as planned. If the valuation is lower or higher than the asking price, the deal may be delayed or fall through entirely.
If the home appraises for more than the asking price, the lender will only issue a mortgage for the appraised amount. This leaves the borrower either to foot the remaining costs themselves or to go back and find a home with a price tag that matches the appraised value. The assessment is also used to calculate the property taxes on the home, so this is an additional cost that may impact the homeowner.
If the seller wants to sell, the asking price must be consistent with the appraised value. If a buyer wants to purchase a home, the asking price and mortgage amount must match the appraised value. That’s why appraisals are so important to everyone involved in the process, and why it’s critical to avoid overly exaggerated loan appraisals.
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What is an inflated loan estimate? How does an overly high loan appraisal affect the home buying process?
An inflated loan appraisal sets the asking price well above the market value of the home. An inflated appraisal is a form of mortgage fraud and can cause buyers to pay much more for a home than they should.
While no appraiser is perfect, they are highly trained professionals with years of experience and require continued education throughout their careers. They must prove all findings that affect the home’s value and are subject to rigorous scrutiny. The consequences of doing a bad job—publishing a biased or intentionally misleading report—can be severe. Because of this, appraisers work hard to ensure that their work is free of bias and personal judgment.
Appraisers are not the only ones who may commit appraisal fraud. Sometimes buyers, sellers or homeowners will manipulate numbers or bribe to change the appraisal. The appraiser may also work with the real estate agent to increase the purchase price of the home to increase the commission.
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The appraiser may feel pressure to increase the price of the home so that the transaction between the buyer and seller goes smoothly. If the appraiser determines that the home is worth less than the asking price, and the loan amount is greater than the lender’s limit, the borrower may not be able to get a mortgage. For example, if a borrower is required to put down a 20% down payment, higher home prices may create a conflict. If the home is considered more expensive, the buyer may not be able to afford it, and the appraiser may not want to be the bearer of bad news.
To prevent this scam, lenders will require a separate appraisal, usually by a preferred appraiser. This often happens around the time of closing, so even if the buyer is ready to purchase the home, the lender may ask the seller to lower the price or may not approve the loan.
Homeowners or buyers may also want to err on the side of caution and seek a second opinion if making a decision based on someone else’s appraisal.
Despite strict regulations, rating fraud still exists. If you can identify these common scams and schemes, you may be able to avoid appraisal fraud. The most common red flags are:
What Are The Pros And Cons Of Being A Loan Officer?
Are you a home buyer affected by an inaccurate loan appraisal? Chances are, you don’t want the deal to fall through, and neither does the seller. Lenders typically won’t lend based on the total value of the home—depending on the borrower’s qualifications and mortgage type—so they certainly won’t lend more than the home is worth.
Lenders want to take on as little risk as possible. If you can’t pay off the loan, they have to sell the house to recoup the money. But if they give you more money than the house is worth, they’re unlikely to get your money back. If you’re a buyer, this means you’re less likely to get the loan you need to buy your dream home.
Fortunately, there are things you can do as a home buyer if you think the appraisal is inaccurate:
If the appraisal determines that the home is worth less than the contract price, you can use the appraisal to negotiate a lower price with the seller. The seller may be motivated to sell and, later in the transaction, may be willing to lower the price to close the deal.
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On the other hand, sellers may be dissatisfied with a low rating and believe it is inaccurate. As a result, they may be reluctant to lower prices or may dispute low valuations. For example, if the assessed value has been affected by foreclosures and sales in the area, the seller may be able to convince the appraiser that their home is worth more than other properties because it is in better condition.
Fortunately, if the owner is able to increase the appraised value to the contract value, this will allow you to continue the process as planned.
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