A Real Estate appraisal is an unbiased estimate of the real or fair market value of a property. A real estate appraisal is used to determine whether the purchase price of the home is appropriate given the conditions, location, and characteristics of the home.
What is a property appraisal? What is the property appraisal process like?
A property appraisal is an estimate of the current market value of a home. A licensed real estate appraiser completes this estimate, which is calculated by comparing recent home sales in the area with the property being appraised.
Mortgage lenders require this to ensure that the money they are lending to a new owner or current owner is a fair amount for the home. Lenders want to make sure that buyers are not overpaying for the property. This is to protect the lender. If the borrower stops making payments on the home and the lender needs to sell the home, the lender wants to be sure that they can recover the amount owed on the loan.
The appraisal of home will be calculated by examining the current local real estate market and comparable properties that have recently been sold. It will also include the characteristics of the house, the square footage and the number of bedrooms and bathrooms.
The real estate appraiser will also look at the overall condition of the house as well as the landscape. If there are any maintenance or repairs that need to be completed, the appraiser will note them. The appraiser will then complete the vision appraisal report on a required standard form.
The appraisal of home can potentially break the deal. If the sales price and the real estate appraisal are not comparable, the lender will not approve the deal. The lender will not want to lend money for a house that is not worth the amount borrowed. As a buyer, this can be a good negotiating tool since no one wants to pay more for a house.
Real Estate Appraisal versus Home Inspection
On the one hand, the lender requires an appraisal of property, while an inspection is recommended but not required. Because of this, you are responsible for finding a home inspector and scheduling the inspection. In the meantime, the lender will schedule your appraisal of property for you.
The two differ in their intent in different ways. The real estate appraisal shall decide the value of the house, while the inspection shall determine its state. As a consequence, their methods are distinct.
In the most simple language, a home inspection moves further into the practical areas of the building, using special tools to identify defects that can not be noticed by the naked eye. An appraiser of the real estate allows a more in-depth analysis of the property, along with an investigation of comparable properties recently sold in the area.
Here you can also read the Differences Between Real Estate Agents and Real Estate Appraisals.
How much is an appraisal for a house?
The cost of appraisal for home depends on a few factors, including: the size of the home, the type of home, the location of the home, the condition of the property, the amount of work and time required.
These factors affect the amount of time, effort and work that goes into the appraisal, which is what ultimately influences the price. For example, a larger house or a multi-unit property has more room to walk around and evaluate.
A house that has unique features makes it difficult to find compositions because those features often make the house unique.
If the house is in a rural area with little near it, the appraiser will have trouble locating another house in the area, much less one which is close to the house in question. This may require further investigation, which takes more time in the appraisal and valuation process.
Factors that can affect the property appraisal
While real estate appraisers are especially qualified to generate reliable opinions about the value of a property, real estate agents can share ideas with their clients about problems that could potentially impact value.
In fact, it could confuse agents and customers to discover that the following unlikely culprits will adversely affect the appraised value of a home:
Bad Odors: Cigarette odor can have a negative impact on the value of a property and its marketability. It is always more difficult to sell a smoker’s home. Also the smell of humidity is a factor that influences a lot when valuing a house.
Bad neighbors: If there are neighboring properties with unruly pets, neglected yards, noisy inhabitants or properties in poor condition, it also influences the value of the properties. Bad neighboring properties could reduce the value of properties in nearby houses.
Bad landscape: Realtors know that exterior appeal is vital when selling a house because it is the first impression of the property that a potential buyer has. Landscaping can also significantly affect property values, as it is estimated that it represents 85 percent of what buyers see for the first time when they look at a house.
Death Cases: There is a stigma on properties where people have died or disasters have occurred, and there is talk of ghosts, suicides and murders. Property owners who want to sell soon after a tragic event will almost certainly find themselves below market value.
The stigma may disappear, but there are exceptions. Owners of stigmatized properties, frustrated by the inability to sell, may want to demolish buildings, but real estate agents should warn them that this is not a good option, as the stigma usually does not disappear with the building.
A Realtor APP that seeks to help real estate practitioners
Now that you know what is an appraisal, how the process is, and the factors that can affect the cost, you should also know that Aidy is a Real Estate CRM that seeks to help real estate practitioners handle valuation and property listing documents and simplify more administrative activities so that agents can spend their time establishing relationships with customers, from any mobile or desktop device.