Sunday, August 12, 2012

Appraisal Issues

For millions of people in Florida and in the Sarasota area, condo living has proven to be the best of both worlds. You don´t have to worry about the upkeep of a big, expensive home, but you still own something and the tax write-off is fantastic. In most cases, the home owners association is supportive and your neighbors are mature adults who have long since gotten over the college kid party phase of blasting their music at 3 AM. Condos are truly the perfect housing answer for a fast growing part of the population.
If you´re looking to join the condo crowd, there are a few things you need to ask yourself before you take the plunge. The buying process for a condo isn´t really all that different then buying a regular home. To be approved for a home loan, you´ll need to have an appraiser from the bank come and take a look at the unit you´re looking to buy. That appraiser will take everything he or she sees into consideration before giving his decision to the bank.
One question you should ask, however, is if common elements in the condo were taken into consideration during the appraisal. The reason why this is important is that you don´t want to get low-balled on your financing. Let´s take a look at common elements in condo developments and how they can affect the asking price.
There are many different common areas in a condo development. A common area can be described as any area that adds value to the property that isn´t owned by you. They include things like a pool, or in some cases pools, that everyone on the property can use, surrounding nature areas which may or may not even be owned by the same people that run the condos, any kind of ornamental and special street lighting that the entire condo community shares, playgrounds made for the condo community and even unsightly things like retention ponds. You can actually be considered to have a "water view" when you overlook a retention pond.
Now that we´ve defined what common areas are, let´s take a look at why it benefits you that they are appraised. When the seller of the condo set their asking price, they took the entire condo community into consideration. Just like a large apartment complex would charge you extra if they had a pool and a gym or a college or university would charge you extra to live on campus based on the amenities you would have access to. So for you to get enough financing from the bank, you´ll need to make sure that the appraiser that determines the worth of the unit you´re looking to buy considers these common areas or there will most likely be a conflict between the asking price and the appraised value. This could mean the difference between getting approved for enough financing to get the condo and not.
But just like most things in life, this knife cuts both ways. You want to make sure that the appraiser doesn´t overvalue the common areas in a condo community because then he or she will probably tell the bank that your offer price is much too low and that it won´t be accepted. The bank can then try to talk you into borrowing more money then you feel comfortable with or more than you can afford to pay back. The key to the appraisal of common areas is balance. You need to make sure your appraiser is experienced with condos so that he or she knows exactly what to look for and exactly what value to assign important things like common areas.
When you´re looking to buy that price piece of Sarasota, FL real estate, a condo can be just the thing you´re looking for. For many single, hard working folks that are intimidated by the thought of caring for a big, cumbersome Sarasota home, a condo is the perfect answer. But make sure your bank appraiser knows his way around a condo development before he reports back to the bank. If his appraisal isn´t balanced, you could end up on the short end of the stick.

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