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Real estate appraisal: What is it and why is it important?

Real estate appraisal

Whether you are buying or selling real estate, getting your home appraised by a licensed professional is an absolute must. A residential appraisal report not only establishes the market value of a property. It also contains other important information that can help you set a competitive listing price or make the right offer.

How does a real estate appraisal take place?

To get your home appraised, you must get in touch with a licensed appraiser in your area. They should be a neutral third party, completely unaffiliated to anyone involved in the buying or selling process.

The appraiser will then come to visit your property for the on-site evaluation. They will also gather existing and relevant sales data about the home by either comparing it to similar sold properties in the neighborhood or estimating the cost of the entire structure.

What your real estate appraisal report should include

Residential appraisal reports typically include photographs of the property and sketch/es of the exterior building. Appraisers also affix street maps that indicate the location of the home as well as the properties used for the sales comparison.

Since appraisals are used to determine the fair market value of a property, the report should also include any pertinent documentation and information that supports the appraiser’s evaluation.

Most appraisers use Fannie Mac’s Uniform Residential Appraisal Report to indicate their findings succinctly. It is an extensive report, covering everything from neighborhood characteristics and site observations to previous property improvements and sales comparison. The report also contains a lengthy section so appraisers can include any other comments about the home.

The importance of real estate appraisals

As mentioned earlier, real estate appraisals do more than determining the market value of a residential property. Here are a couple of reasons why it may be important to your home buying or selling process:

  1. It can affect your mortgage loan application

    One of the most important reasons why real estate appraisals should not be skipped is that it has a significant impact on mortgage loan applications.

    As you already know, a residential appraisal report presents an unbiased opinion on the estimated value of a home. If you are buying a home, mortgage companies will use the information to determine if the asking price of the property and the amount you intend to borrow are both appropriate.

  2. It will help you avoid overpaying for your dream home

    It is no secret that some home sellers tend to inflate the value of their home and, as a result, set an asking price that is higher than its actual market value. It could be because of their emotional ties to the property, or they simply want to make a generous profit from the sale. Unfortunately, some home buyers take the bait and end up overpaying.

    A real estate appraisal can protect you from such a scenario. Should a low appraisal come from the report, you have the upper hand in the negotiating table, increasing your chances of purchasing the home for less. Do not skip one of the most important steps to buying a home.

  3. It can help you set the right listing price

    If you are selling your home, one of the ways you can arrive at a reasonable and realistic listing price is to have the property appraised. Should you get a low appraisal, you and your real estate agent can plot out several courses of action to improve its value and therefore its price.

    Take note, however, that while renovations and home upgrades can boost your home’s value, other market factors can still affect the real estate appraisal. In the event that you still get a low appraisal, consider seeking the second opinion of another licensed appraiser.

    You and your real estate agent may also want to present factual evidence that your property is worth more. The appraiser may consider this and reevaluate your home.

Appraisals may also affect mortgage refinancing

Refinancing your conventional mortgage might not be possible if you get a low appraisal. This is because lenders typically require homes to be appraised higher or at the same value as the amount intended to be borrowed.

As is the case with selling a home, you can dispute the evaluation and ask another qualified appraiser to look at the property.

Learn more about home appraisals

With years of experience in Anacortes homes for sale, The Groesbeck Group has extensive knowledge on home appraisals. Learn more about this step and how it can affect your home buying or selling process by getting in touch with the team at 360.941.3734 or Info(at)JeanGroesbeck(dotted)com.