A home appraisal is a key component of a mortgage process.
It’s a professional judgment of a home’s value, employed whenever a mortgage is used in the purchase, refinance, or sale of a real estate property.
To determine the house’s value, the appraiser conducts an on-site inspection, evaluates the external and internal features, and makes a comparison to recent and comparable sales, within the neighborhood where this property is located.
Since the property acts as collateral in the event that the borrower defaults, the lender wants to ensure that the loan isn’t too large in comparison to the property’s worth. Comps are used as a baseline for property value and must be as near to identical as possible to the home being bought or sold, to ensure an accurate appraisal.
Real estate appraisers consider many details to determine a home’s value. The appraiser will do market research and usually visit the home to examine the property
Any positive or negative site influences must be observed and documented by an appraiser. The checklist of an appraiser includes things like lot shape, topography, positive views like water, mountains, or valleys, and negative views like powerlines, industrial facilities, or a cemetery, as well as traffic noise, also known as traffic pollution.
Aside from the immediate exterior, the appraiser considers the location of the house, whether it is in an urban, suburban, or rural setting, and the type of neighborhood.
Other Home appraisal checklists include;
- Local housing market trends.
- Home size.
- Age and design of the home.
- Types of interior and exterior materials.
- Amenities, such as fireplaces or decks.
- Home improvements and renovations.
You have the right to a free copy of the appraisal report before the loan closes, as the mortgage borrower. Reading the report, if you uncover problems or believe the estimated value is incorrect, notify the lender. Any relevant information you submit could cause the appraiser to reconsider their decision. You can also get a second appraisal from the lender. Keep in mind that if your request is approved, you will have to pay for the assessment.
If the appraised value of a home you wish to buy is lower than you expected, you might be able to utilize that knowledge to bargain with the seller for a lower price.