Appraisals – Know the Process Courtesy of the Think Melissa Team
A subject that is always discussed with our buyers and sellers is the appraisal. An appraisal is an expert estimate of the value of a property.
An appraisal ordered by a lender for a buyer will most likely yield a more conservative value than an appraisal ordered by another party, for example a home owner.
When evaluating a property’s value, appraisers note the characteristics of the property and the surrounding area, such as a view or noisy road. They also consider the overall condition, including its foundation and roof or any renovations that may have been done. We are always saying to our clients that the value of a home is based off of location, condition, and other like minded comps.
After visiting the property, the appraiser analyzes the property relative to comparable home sales, location, and condition. During the entire process, appraisers record their research, observations, and methods used in providing an estimate of the property’s value.
In regards to purchasing a new home (new construction), most builders will not cover the deficit in value (the difference between the base price of the home and the sales price) if there are a lot of upgrades selected by the buyers.
An appraisal’s value is not to be confused with an assessor’s value, which is provided for property tax assessments. Most assessors work for local governments. Unlike appraisers, who generally focus on one property at a time, assessors often value an entire neighborhood of homes at once by using mass appraisal techniques and computer-assisted appraisal systems.
There are some differences between the residential and commercial appraisal process too.
There are three approaches that an appraiser uses to determine the value of a home.
Contact us if you would like more information on the three approaches that an appraiser uses to determine value or if you are thinking of buying or selling in the future. Something else that Angie and I share with people frequently is the importance of having the right representation, when you are buying or selling a home. If you work with our team, you will receive the best legal and financial protection.