Real Estate Appraisals

Understanding Real Estate Appraisals

As a property buyer seeking financing from mortgage providers, real estate appraisals is a paramount requirement in the process of buying and selling property. The appraisal value is instrumental in facilitating the property transaction. This is why more emphasis should be put on the property appraisal. Both the buyer and the seller have no control over property value appraisal.

However, it is paramount for both the buyer and seller to understand how appraisals work.

What You Need To Know About Real Estate Appraisals:

  1. The Difference Between The Property Appraisal And Inspection

Both the property appraisal and inspection are paramount for any property transactions. Property Appraisal involves determining the market value of a property, based on factors like the locality and other equivalent property elsewhere. The Home inspection on the other hand, involves, checking for flows and problems in a particular property.

The appraisal may disclose obvious flaws but Inspection goes much deeper. This is why some lenders might combine the two processes.

  1. The Appraisal Process

Sometimes the appraiser might be involved checking the property’s state of repair and its square forage. However, his focus will be on general factors that affects the property market value. The appraiser will thoroughly check all the rooms for any details, to enable him make a comparative price check with equivalent properties or recent property sales.

  1. Types Of Appraisals

Normally an appraiser will inspect both the inside and outside the property. However, there is ‘driver-by-appraisal, which is an exterior appraisal which is not very compressive. Drive-by-Appraisals cannot be use for securing a mortgage, as many lenders consider it shallow.

  1. The Importance Of Appraisals

Appraisers are more experienced in determining the accurate value of property, to avoid overpricing or under valuing of the property. Appraisals are crucial if the buyer is being financed by mortgage providers.

It is important that both the home buyer and the seller settle on a fair price, since the buyer is willing to pay less while the seller is more interested in making more money. Appraisals will provide optimal prices for both parties involved.

Appraisals are also important to mortgage providers to enable them mitigate risks and safeguard their money. It will certainly provide them a glance of the money they expect to get if they sell the property after the buyer defaults. Lenders may be unwilling to provide finances to properties whose appraisal value is low.

  1. How Often Can An Appraisal Be Done?

Normally appraisals are valid for six months. However, in cases of rapidly fluctuating property market, lenders require appraisals that are less than three months. It is crucial to remember that the appraiser will focus on finished improvements of the property. Therefore, valuation cannot be done on good faith.

The value quoted by the appraiser in their report, is as per their last day of appraisal. Valuation for real estate keeps changing after sometime, which requires the appraisal to be recertified from time to time, whenever it becomes outdated.

Terry Cantrell

You must be logged in to post a comment Login

Leave a Reply