Appraisal is needed in order to evaluate how much your house is worth so that when you go to list it, you can put a price on it accordingly. This information is more important to a seller rather than a buyer, and if you are the seller, this is very helpful. Buyers make use of home appraisal companies to help them determine how much they will be paying for a home. A lender also uses home appraisal to ensure that the property is in condition and at the same time, the lender knows if he or she is not borrowing more than the price of the house.
Besides the seller and buyer, city governments also make use of appraisals to determine the value of a property as well as the levy taxes against it. With all of the uses of home appraisal, it is important to understand what appraisers are looking for when they are sent to evaluate your home.
The Bases of a House Appraisal
Have you ever been curious as to what a home appraisal is based on? Whether you’re buying or selling, understanding what goes in to that final appraised number can make a world of a difference in your real estate process. Here are some of the things that appraisers looks into when evaluating a house:
The overall condition of the home
Generally, the house’s condition is the most important factor that appraisers look at when determining it’s value. Houses that need major improvement like adding or replacing new roof, repairing of sidings or driveway will be appraised at a lower value than those that don’t need as much work. Another important thing that appraisers look into is the past constructions done to the house. Fixtures and flooring updates (or condition of original) are also important. The house’s plumbing and appliances also adds value to the house during appraisal along with the furnace, air conditioner, water heater and radiators. Keep in mind that the age and condition of these operating components are also considered during appraisal so make sure that your house’s heater or air conditioners are in their best condition.
Special features of the home
Any and all additions to a home play an important role during the evaluation. Improvements and unique features you have added in your home can increase (or decrease if done poorly) it’s value. Examples of common updates and changes include the addition of an extra room or bathroom, a new or updated patio or deck in the backyard, or a swimming pool. These will definitely give your house higher value. Extra storage space or a large garage can also lift your house’s value in the market as long as it’s ready to use.
The Home’s Location
Anyone who works in the real estate business knows that the location of the house or property plays an important role in selling them. Homes that are located in desirable areas can be evaluated at a higher price, while the same thing goes with properties used in commercial businesses. If the house is located in an area or neighborhood with low crime rates, good economic opportunities or good districts are great factors that could affect the worth of your home. If all of these are present in the area of the house, then it’s more likely to sell quick. There are also other location features that could add more value to your house. This could be the view from the house and the degree of privacy from other people or neighbors. Appraisers will use the comparative market analysis where in they use the sale price of a similar home nearby to help determine the market value of the property or house.
Market Conditions are Calculated
The housing market is ever changing so a house value may rise or fall with it. This happens when there are changes in the supply and demand as well as the mortgage interest rates. It could also be due to the general economic condition. Although these changes are not for everyone’s advantages, it could be used by appraisers to evaluate a house. As a result, there could be a chance to buy properties while they are priced low and sell them when the market demand is stronger.
Replacement Costs are also Considered
There are appraisers that don’t rely on the market value alone, but also the entire cost of the house. Natural disasters may not always be avoided and could potentially destroy a home, so insurance companies often ask “how much was the cost of the house when it was built (or rebuilt) from the ground up?” Replacement costs means the labor, site preparation, construction materials and permits as well as other expenses paid for by the owner. All of these play an important factor in evaluating the entire cost of a house.
Reasons Why a House is Appraised
Having your house evaluated is not only done before you sell it. In fact, there are many reasons why a house is being appraised and here are a few:
Before it is sold – anyone who wishes to sell their house must have it appraised. Why? This is to further determine how much it’s worth and if it can be placed in the market. Appraisals determine the asking price and most likely increase the chance of an immediate sale.
When refinancing your home – if you are planning to refinance your house, then it needs to be appraised. This can ensure a new mortgage amount according to what the house is worth especially if your house value increased from the time you first bought it. However if the value declined, getting a new loan may be difficult.
Home equity loan – this is a second loan that you can get even if there is an existing mortgage which is usually based on how much equity you have left after the remaining mortgage is deducted from the actual value of your house. If the house value dropped then you may not be qualified to get a home equity loan.
Other loans – a house can be used as a collateral and so getting it appraised can be helpful in obtaining other types of loan that you wish to apply for. Appraising a house is also important as banks will make sure that their money will be paid or supported by the value of your house.
Tax assessments – this means that you need your house appraised if you have it listed high on tax bill. You can then negotiate or appeal an assessment in case the housing prices dropped in your city or neighborhood.
Is it worth getting your house appraised?
Yes! It is a helpful evaluation that can determine the actual value of your home. So in case you are planning to sell it or simply want to know it’s value for future uses, a house appraisal is good to get. Besides, you might never know when it’s going to be useful. Better be prepared than sorry, right? So get that appraisal now and good luck on your future plans!
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