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What You Need to Know About a Real Estate Appraisal
Real estate appraisals are a crucial step in the process of buying or selling a home. They can either make or break your chances of closing a deal. They can also help you make important investment decisions.
Depending on the type of property, appraisers use a few different approaches to value homes. These include the sales comparison method, cost approach and income capitalization method.
In the sales comparison method, an appraiser uses information from comparable properties that recently sold in your area. These are commonly referred to as “comps.”
The appraiser will analyze the comps’ sale prices, their location and other factors to come up with an opinion of value. The appraiser may adjust these values to account for a wide range of differences in the two comps’ conditions and features.
Some of these adjustments might be as simple as adjusting the sale price of one comp higher to reflect an upgrade in its kitchen or bathrooms, while lowering the sale price of another comp because it has an outdated kitchen.
These adjustments are intended to give an appraiser a better idea of how much your home is worth in the current market. However, it’s important to remember that the appraiser’s opinions are not binding.
The value of your home depends on a number of factors, including how the home is located and whether or not it’s being occupied. In addition, the value of the land that surrounds the house will affect how it’s valued.
If the land surrounding your house is in a less desirable part of town, it will likely have a negative impact on your final appraisal. Similarly, if the neighborhood around your house has a lot of vacancy or foreclosures, it will have a negative impact on the value of the house as well.
In addition to analyzing the value of the land, the appraiser will also examine the quality and condition of the house itself. This includes a physical inspection of the interior and exterior areas.
Once the appraisal is complete, the appraiser will issue a report to the lender. This report can help the lender decide whether or not to approve your loan, based on the appraised value of the property.
Appraisals can take a long time, so it’s a good idea to get in touch with your lender early on if you have questions about the appraisal. They’ll be able to provide you with a list of approved appraisers and help you find a suitable company to conduct the appraisal.
Once you’ve received your appraisal report, be sure to review it and see if there are any errors. If there are any, you can ask for a second appraisal from your bank.