Home Appraisals - What You Should KNow
With policies always changing, it is important to understand the home appraisal process.
Home appraisals are a required part of the home buying process. With policies and procedures constantly being updated and requirements changing from month to month, it is important to understand the basics of the appraisal process. This is good information for both the buyer and the seller since the appraised value can heavily impact the real estate transaction in the final steps.
Things To Know About Home Appraisals
1. Is a home appraisal the same as a home inspection?
No, they are not the same. An appraisal is intended to confirm a home’s value based on its current condition. A home inspection, however, digs deeper into the areas of a home that are not always visible during a home tour or walk-through of the property. A home inspection report is more thorough and complete than an appraisal inspection report and can include findings for plumbing, electrical, roof, foundation, etc.
2. Why are appraisers hired?
Appraisers are hired for a number of services involved with real estate. Most often, Appraisers are used to completing appraisals for buying/selling a home, estate planning, divorce requirements, and tax appeal resolution. Specifically for real estate transactions, Appraisers estimate property value when the property is sold, mortgaged, taxed, insured, or developed.
3. What is written in the appraisal document?
Upon completion of a home appraisal, documentation may be shared with the seller. Be sure to keep a copy of any appraisal report documentation as it contains confidential information about your home and comparable homes in your area.
4. How is a home's value determined?
There are a number of factors that impact property value. Some of those factors can include:
- Overall condition of the home as is
- Recent improvements to the home
- Address, location, and surrounding neighborhood
- Comparable homes recently sold in the immediate area
- Current housing market trends
5. Do Appraisers take other nearly home sale prices into consideration?
Home values and appreciation or depreciation are unique to the property. While nearby home values are a determining factor in home appraisals, there are many other heavily weighted factors that impact the appraised home value. That being said, you can usually assume that if all other home values in the area are rising, your home value is also likely appreciating. Your Real Estate Agent can help you determine estimated home value for sale price.
6. What do home buyers need to know?
The appraisal process is almost always a required step before closing on the home purchase. Once the appraisal is complete, the Appraiser will inform the Lender if the home value came in at, above, or below the agreed-upon contract purchase price. If the value is at or above the contract price, the transaction proceeds as planned. If, however, the value is below the contract price, there can be delays in the transaction. A value below the contract price can, at times, even cause the transaction to fall apart. Your Real Estate Agent will navigate this process and do everything possible to keep the transaction moving forward.
For most cases, the home appraisal process is just another step in the transaction and gets you one step closer to close on the purchase or sell. It is highly recommended that you understand the basics of the home appraisal process to ensure your transaction runs more smoothly. Your Lender can help answer questions pertaining to the appraisal process up and until the appraisal is complete. Your Real Estate Agent can help navigate the next steps in the transaction process once the home appraisal value comes in.