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What is a home appraisal, and how does it work?
February 28th, 2024 10:40 AM
What Is a Home Appraisal and How Does It Work?


If you're in the process of buying or selling a home, getting the property appraised is likely part of the process. But what exactly is a home appraisal, and how does the appraisal process work?


A home appraisal is a professional estimate of the current market value of a residential property. An appraisal is conducted by a licensed professional called an appraiser who will analyze recent home sales in the area, condition of the home, improvements made, and other key factors that could impact value.


The goal of the appraisal is to provide an objective and unbiased opinion of how much a home would likely sell for if it were to hit the open market. This is important for a number of reasons in the home buying and selling process:


Mortgage lenders require an appraisal before approving a home loan to ensure the property is worth at least as much as the purchase price.
Sellers need to determine an appropriate asking price for their listing.
Buyers and sellers can use the appraisal to guide price negotiation discussions.
Homeowners may need an appraisal for insurance or tax assessment purposes.
In summary, a home appraisal is a professional valuation conducted by a licensed appraiser to estimate the current market value of a residential property based on recent comparable sales and property details.


How Does the Home Appraisal Process Work?


Here are the typical steps involved in the home appraisal process:


Ordering the Appraisal
For a purchase transaction, the buyer or their lender will typically order and pay for the appraisal. For other purposes like obtaining a home equity loan, the homeowner requests the appraisal. Different lenders may have preferred appraisal management companies they work with regularly.


Scheduling the Site Visit
The appraiser will schedule an appointment to inspect the subject property being appraised. They need access to all interior areas like basement, attic, and garage. Photos are usually taken of key features and condition issues.


Researching Comparable Sales
While on site, the appraiser may ask questions about upgrades and renovations. After, they research recently sold comparable properties in the same neighborhood with similar features.


Calculating the Appraised Value
Using various valuation approaches and factoring in property details and comparables, the appraiser estimates the property's current market value and documents their analysis in a detailed report.


Reviewing and Finalizing the Report
The appraisal goes through an internal quality control review process. The buyer, seller, and lender receive copies of the certified appraisal report within a few business days.


Possible Reappraisal
If the appraised value comes in lower than the purchase price, the buyer or seller may request a review appraisal from a different appraiser. This could trigger price renegotiation.


In summary, the appraisal process involves inspection of the subject property, research on recent comparable sales, analyzing key factors impacting value, and documenting the estimated market value in a detailed certified report.


Tips for a Successful Home Appraisal


Here are some tips homeowners can follow to help ensure a smooth appraisal process and valuation:


Thoroughly prepare the property by decluttering, cleaning, and fixing any minor issues before the scheduled site visit.
Provide appraiser access to all areas including basement, attic and garage for interior photos.
Have documentation ready of renovations, permits or home improvements completed.
Be available to answer any questions the appraiser may have about the property details.
Research recently sold comparable properties in the neighborhood in case the appraiser needs additional suggestions.
An open, organized and cooperative process helps appraisers thoroughly assess the home's features and condition for an accurate valuation.


What If You Disagree with the Appraised Value?


If the appraised value comes in lower than anticipated, there are a few options homeowners have:


Request a review appraisal from a different licensed appraiser which may yield a different opinion of value.
Provide additional documentation of recent updates or comparables closer to the desired value to the original appraiser for reconsideration.
Negotiate price reductions in the purchase agreement if it impacts loan approval.
Pay the difference between appraised value and purchase price in cash rather than financing additional amount.
Appraisals can be subjective, so getting a second opinion is reasonable if value seems off. Communication is key to try resolving discrepancies up front.


Final Thoughts on Home Appraisals


In summary, a home appraisal is an important step in the home buying and selling process conducted by a licensed professional to estimate the current market value of a residential property. Understanding how appraisals work and what impacts value can help homeowners navigate the process smoothly.


With preparation, cooperation and open communication, discrepancies in appraised value versus expectations can usually be resolved. Overall, the appraisal aims to provide an impartial third party opinion of property worth.
Posted in:FAQ's and tagged: FAQ's
Posted by Genie Motto on February 28th, 2024 10:40 AMPost a Comment

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