What is a Home Appraisal?
A residential property appraisal helps establish a home’s market value, or the likely sales price that the property would fetch if offered in a competitive real estate market. Whenever someone uses a home or other type of real estate as security for a loan, the lender will order an appraisal to be conducted by a licensed appraisal professional. This step is critical from the lender’s prospective because it reflects the likelihood the property will sell for at least the amount of their investment on it.
It’s also important for you, the buyer or seller…
If on the buying side, it shows you in black and white that the price you’re paying is indeed in line with what the banks consider a fair market value; if on the selling side, it shows you how much you can realistically ask for your house.
The appraised value should not be confused with the asking price, offer price, or sales price. Asking price is what a seller indicates as a fair and reasonable offer for his/her home. A seller is free to set whatever asking price he/she chooses. An offer price on the other hand, is a number that the buyer feels he/she is willing to pay. This may be an accurate reflection of the true market value of a home or an attempt by the buyer to purchase the property at a considerable discount. The sales price is what the buyer and seller actually agree upon through negotiations; it generally lies somewhere between the asking price and the offer price.
Appraisers are licensed by their respective states after completing course work and/or a job internship that helps them become familiar with their local real estate markets. The appraisal process itself begins with a thorough inspection of the property being appraised to determine the true status of the property. The appraiser will look at features like number of bedrooms and bathrooms to ensure that they really exist and are in good condition. Most important, the appraisal looks for any obvious features-or defects-that would affect the value of the house.