What is the difference between an appraisal and a valuation? How much should I expect to pay for my house? And why is it important to hire an independent appraiser?
An appraisal is a professional opinion of the property’s value. An appraisal is usually performed by an independent third party who has no financial interest in the transaction. The purpose of an appraisal is to provide information about the property’s current condition and its potential future value.
A valuation is a calculation of the property’s worth. In other words, it’s a prediction of its future value. Valuations are typically done by real estate agents or mortgage lenders. They’re often required before buying or selling a property.
What does a home appraiser do?
Home appraisers evaluate the property’s condition, market trends, and other factors when determining its worth. They also consider the location, size, age, and quality of construction. During the appraisal, they may check out the property’s history, including any recent sales, tax records, and utility bills. If there are problems with the house, like termites or mold, they might note those issues on the report.
An appraiser will go through research on the surrounding area, conduct a home visit, and calculate a home’s fair market value. This number then gives homeowners (or future homeowners) a better idea of what a home is actually worth. Lenders need this information to determine whether they should lend money to a borrower, and if so, how much.
Who hires and pays for the home appraiser?
Appraisers are paid per appraisal, depending on who hired them. In the case of refinancing, the lender hires an appraiser directly. In the case of buying or selling a property, the seller or buyer hires an appraiser.
When a mortgage is issued, the lender will often require an appraisal before approving the loan. The lender may also ask for an appraisal if the property is sold at auction. A qualified appraiser should have experience in the area and industry in which you intend to buy.
What do home appraisers do when they visit your home?
Appraisers assess the value of a home by focusing on the following:
- Condition: If renovations or upgrades have been made, the neighborhood conformity, the home’s livability, and necessary repairs.
- Attributes: The size & age of the home, the number of bedrooms & bathrooms, the type of house (single-family, condo, townhouse, etc.), design, and style.
- Neighborhood: The type of neighborhood (rural, suburban, or urban), housing trends, the pace of the neighborhood, and whether property values are increasing or decreasing.
What else do appraisers do?
To determine the value of your home, an appraiser will compare it to other properties in the neighborhood. These comparables are called comps. A comp is usually a recent sale of a home of similar size, age, and condition to yours. The appraiser looks at all the information about the comps and adds or subtracts value based on what he finds. If there is a lot of difference between the comps, then the appraiser might need to adjust his estimate. He may also adjust the price down if the comps are selling for less than market value.
What if my home appraisal comes in low?
If the appraisal comes in low, consider these questions:
- Are there special features to your home (like a screened-in porch or a pool) and are they noted in the report?
- Did the appraiser take photos of your house during their visit?
- Did they evaluate both the inside and outside of your home?
Preparing for an appraisal & what comes next
Home appraisals are an important step in selling a home. An agent can help you understand what buyers are looking for when they visit your house, and how to price it accordingly.
Team Melton has over 50 combined years of real estate experience to assist you through every step of the process. Contact us today to get started on selling your home!