An appraisal is a property valuation completed by an unbiased professional hired by your mortgage company. With an appraisal in hand, your lender knows if they have the collateral they need in case something goes wrong.
The appraisal is one of the first steps in the closing process.
Lenders rely on appraisers, who are licensed or certified to do the job, to act as an objective third party. The condo buyer can trust appraisers to give the prospective lender a fair assessment of the new condo’s value.
In NYC, an appraisal costs about $500. You pay this fee to your lender, who hires and pays the appraiser. Though some fees in a mortgage closing can be negotiated, the appraisal fee is not one of them.
What do condo appraisers look for?
They aim to identify the condo’s fundamental value independent of temporary trappings such as furniture.
Key features for appraisal include the condo’s square footage, age, number of bedrooms and bathrooms, lot size, location, and view.
Appraisers conduct a visual inspection of your potential new condo and will note any necessary repairs. They also consider factors such as recent sales of similar properties and market trends in the area.
See the condo appraisal form at the bottom of this post for an example.
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What happens if the condo appraisal differs from the contract price?
If the appraisal is at or above the contract price, the transactions proceeds without issue. If the appraiser says the condo is worth less than the contract price, the lender will not provide the loan unless the seller drops the contract price.
However, condo buyers do not necessarily need to fear this scenario and could even benefit from it. By the time the sponsor and buyer get to this stage, the sponsor typically does not want to lose the deal. Therefore, they may drop the price to meet the bank’s demands and close.
If the sponsor, or developer, thinks an appraisal is too low and will not drop the condo’s price, a condo buyer can ask for another appraisal. Appraisers try to be impartial and accurate but sometimes make mistakes. In fact, the buyer can even present a case to the appraiser to get them to revise the assessment upward.
How do condo buyers know how much a home is worth?
Condo buyers may feel they are at the mercy of appraisers or developers when it comes to assessing their new home’s value. Data about comparable condo sales and even the other condos in the building is hard to find.
Fortunately, for condo buyers who want to conduct their own unofficial appraisal, there’s Marketproof New Development. Marketproof provides the most comprehensive and up-to-date information anywhere on new NYC condos.
Marketproof will show you details such as how much shadow inventory is in your building and how much comparable condos have recently closed and sold for. This information empowers NYC condo buyers to get the best possible deal.
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By using Marketproof New Development, you will be able to search both publicly listed properties and unlisted off-market properties not available on popular listing sites. Marketproof can increase the inventory you see by 9-10x what you may see on other sites.
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Sample condo appraisal formCondo-appraisal-form
Link to the form above: https://blocksandlots.com/wp-content/uploads/2020/12/Condo-appraisal-form.pdf
Top photo courtesy of 550 Vanderbilt.