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If you’re planning to buy a home, an appraisal is an important step in the process. It’s a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. It’s also a different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction. Here’s the breakdown of each one and why they’re both important when buying a home.
The National Association of Realtors (NAR) explains:
“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”
When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.
This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.
However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.
Here’s the key difference between an appraisal and an inspection. MSN explains:
“In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home.”
The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.
The appraisal and the inspection are critical steps when buying a home, and you don’t need to manage them by yourself. Let’s connect today so you have the expert guidance you need to navigate through the entire homebuying process.
Baldwin County AL Real Estate: Reverse 1031 Exchange Demand Rising
A slower Baldwin County AL real estate market is creating more of a demand for reverse 1031 exchanges. Properties are taking longer to sell making it difficult for sellers to adhere to 1031 exchange 180 day rules. But there is another option called a Reverse 1031 Exchange allowing for the roll-over of proceeds after closing on another property. Inman had a great article by Ilyce Glink addressing reverse exchanges. Read what she has to say:
Q: We are Canadian citizens who have owned a home in Fort Myers, Fla., for four years. There is no mortgage on the property.
We have put the property up for sale, and have made a down payment on a new house. We have bought and sold in the past, and I understand that as long as the new house is equal or higher in value, there are no capital gains taxes owed on the profits under IRS tax code 1031.
What happens if we have to close on the new house and the existing one has not sold yet? When it does sell, will we be able to use the proceeds of the sale to pay off the new mortgage with no penalty?
A: A 1031 tax-free exchange is used when a real estate investor sells a piece of property and purchases a replacement property that costs at least that much or more. The exchange must happen within a specified period of time. You have 45 days to identify the property and 180 days in which to close.
Many real estate investors are finding that the slow real estate market makes it tough to adhere to the deadlines. What can you do? You can set up a reverse exchange, in which you purchase the new property first and then sell the existing property afterward.
A qualified 1031 exchange company should be able to handle a reverse exchange. But be prepared, as reverse exchanges cost significantly more than a regular 1031 exchange. You should also hire a real estate attorney to make sure you’re doing it correctly and meeting all of the necessary deadlines.
A 1031 tax-free exchange cannot be used on personal property, so be sure that you are not using the property more than the time allotted by the Internal Revenue Service (IRS). Your 1031 exchange company should be able to advise you.
Are you selling Baldwin County AL real estate qualifying for a 1031 exchange? Visit JudySells.com or give me a call for more information.
Mobile Bay Real Estate For Sale:
Best value on the Bay! 158 feet of bay frontage with wide sandy beach in Daphne. Easy commute to Mobile. Beautiful views. Nice elevation. Covered patio with deck plus terrace. Inground pool. Easy access to bay. Oversized rooms. Den with wood burning fireplace.
For more information on Haleys Lane or other Baldwin County AL real estate, visit JudySells.com or give us a call, 251-990-0569.
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Baldwin County AL Real Estate For Sale In Fairhope
True Bay house in Point Clear, Cypress board & batten, heart pine floors – tall ceilings. Tremendous detail. Incredible lines. Expandable. Full floored attic. Plus guest house. 3 bedrooms, 2 baths. Perfect! Full Kitchen – Crabbing pier. Beautifully landscaped. wide, wide screed porch.
For more information on 14801 Scenic Highway or other Baldwin County AL real estate, visit JudySells.com or give us a call, 251-990-0569.
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437 VILLAGE DRIVE – MONTROSE VILLAGE IN DAPHNE
BAYFRONT ELEGANCE IN 6, 132 SQ FT 4 BR/5.5 BA HOME IN PRISTINE MONTROSE VILLAGE WITH INCREDIBLE BAYFRONT VIEWS AND MAGNIFICENT YARD & SITTING AREAS. Designer was Fritz vonOstoff, renowned New Orleans landscape artist. Built by Bill Purvis in 1991. Over 103+ front feet on the Bay. Sought-after area. Incredible floor plan. Unbelievable views.
Enter the custom solid mahogany door to this incredible mansion and find yourself inside a huge formal marble foyer, with incredible Bay views and perfect for greeting guests. French doors lead to the oversized walnut-paneled Study with custom-built mantle. Entertain your guests in the formal elegance of the large Dining Room and Living Room or in the oversized, chic Library. Or, you may prefer the casual grandeur of the gourmet Chef’s Kitchen, with stylish custom Siematic baked-on lacquer cabinets and Mexican granite countertops to match.
This Kitchen has all the amenities, including high-end stainless steel appliances, and is open to the equally large and airy Breakfast Room. The incredible Master Suite will be your private retreat and your guests will love the elegant Guest Suite with marble floors and built-in cabinets. Two other large bedrooms complete the upstairs, along with a stylish Upstairs Sitting Room.
Outside, you have an oversized 40 x 18 Gunite pool with shallow ends at both ends and deep center, as well as heated spa jets. The pool area and bath house include magnificent sitting areas with a huge flagstone patio and decorative lion’s heads around the pool itself. omplete pool bath with shower and granite counters. Gas grill for easy outdoor entertaining. You and your guests will enjoy incredible views of Mobile Bay in true style.
Custom-designed courtyard was designed for beauty and privacy with many trees, including four Japanese Maples, and custom-made statue. Unbelievable oversized storage room with built-in cabinets / sink. Double garage with attic storage and complete 12 x 20 attached workshop, with window heat pump unit, sink with 6 gallon water heater and both 220 / 110 electrical wiring.
For more information on 437 Village Drive or other Baldwin County AL real estate, visit JudySells.com or give us a call, 251-990-0569
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