Whether it’s buying a home or refinancing a mortgage, real estate appraisals are a necessity for any financed property.
What is a real estate appraisal?
Basically, it is the process of developing an opinion about the value of a property. They usually vary by state, but consist of three important features:-
1) Inspection: An appraiser visits the property, then inspects and analyses the property to determine a fair market value.
2) Comparables: The appraiser then analyses other similar properties within the area, and compares recent sales to conclude a market value.
3) Final appraisal report: The appraiser will use the data from the above, and issue a final appraisal report.
The top ten things you need to know about a real estate inspection are:-
1.) The licensed appraiser confirms that the property exists and is in habitable condition.
2.) The reported square footage of the property is confirmed by the appraiser.
3.) All the rooms of the property will be thoroughly checked for damages, as it could obviously affect the value.
4.) Reported upgrades, for which you will provide the appraiser the information, will be verified.
5.) All features of a property, which could affect its value, will be taken into account by the appraiser. Like chimneys, fireplaces, or built-in appliances in the kitchen. Removable items are not included.
6.) Although basements will be checked for any new updates, it is never included in a property’s square footage. Updated basements may increase the value of a property as well.
7.) Verification of a working furnace and air will be done. But unlike a home inspector, the appraiser will only check if it exists and appears to work.
8.) The appraiser will then note down the number of bedrooms. For a room to be counted as a bedroom, it must have windows and closets.
9.) All the land of the property will be measured by the appraiser.
10.) Lastly, whatever updates you make to your property, will not necessarily result in an increase in the value of your property by the same amount. e.g: If you get a new fireplace for $4000, so it won’t increase the value of the property by $4000.
You should always make sure that you make the inspection as easy as possible for the appraiser. It doesn’t matter if your property is clean or not, but all the rooms should be easily accessible. Also because appraisers are on the go all the time, it is important for you to never miss you’ve scheduled appraisal.
Minor repairs like a broken light bulb or a cracked window should be taken care of because they usually do not miss the eye of an appraiser.
If you understand the appraisal process and are prepared for it, it is likely to result in a higher market value for your property. You never know, this might just give you the edge, and qualify you for your mortgage.