Appraisals are an important part of the home buying process when the buyers are being financed.
Lenders require appraisals when buyers are financing a home loan. An appraisal provides the lender with an assurance that the property will sell for at least the amount of money it is lending.
In some cases, the buyer pays for the appraisal at the time of loan application. Other times, the appraisal fee is added to the settlement statement and paid at the closing table.
They will be looking at a number of different things in order to get an accurate appraisal such as:
Exterior- A home is made up of a foundation, siding/walls and a roof. These play major roles in the functionality and the reliability of a dwelling and the appraiser will pay serious attention to all of them. The appraiser is going to be taking mental notes of everything. Making an effort for your yard to look great as well.
The Interior-Even if the roof, siding & foundation are all in excellent shape, the interior of your home is just as important to the appraiser when assessing value. Home improvements will certainly be a factor in how an appraiser determines the value. Features like new flooring, a renovated bathroom or kitchen, new appliances, or an HVAC system
How do real estate appraisers determine market value? Now that you understand what appraisers look at during a real estate appraisal you probably want to know how they calculate the actual market value from this information. The way most residential property is evaluated is by following what is known as the comparable sales price approach.
An appraiser will use market data of most similar homes that have sold within a certain distance of your home over the last 6 months. The older the data the less accurate it is in determining current real estate values. These homes that they are using will be what is considered most similar to your home. Location, age, condition, amenities are all part of what goes into determining residential real estate value.
When a low appraisal comes in-
Nobody wants to be faced with going through a low appraisal when selling a home. If you get stuck with a low appraisal the first thing you will want to do is get a copy of the appraisal report and go over it with a fine tooth comb. Are there things you can do to avoid getting stuck with a low appraisal of the value of your home? Of course and it starts with paying attention to the condition and presentation of your home!
Real Estate appraisers also do not look at the Zillow value of your home either! Appraisers understand that Zillow real estate values are not accurate. In fact, in many markets, they are so far off you wonder why on earth Zillow would want to have such inaccurate information on an otherwise excellent site for providing real estate data.
As a homeowner, these are all the things you should be concerned about trying to navigate your way through the real estate appraisal process. I hope this information has been useful whether you will be selling your home now or in the near future!
Your best option is to work with an experienced Realtor, such as myself, who knows how to help you avoid appraisal issues. If they do arise, we can be your best resource.
Call or Email me, Caron Koteles Riha (248) 379-6651 for all your real estate needs!!