The game of Monopoly is the first glimpse many people have into the real world process of buying and selling real estate. Many of the things that help determine the winner of the game, such as the importance of your property’s location and your possible return on investment, are important factors to consider when choosing where to buy in real life. One of the most important aspects which come into play when buying a property is home appraisals, which provide an estimate of the value of the home.
When Do You Need an Appraisal?
You will need an appraisal if you need to borrow money from a lender in order to purchase a house. The lender will use the appraisal to determine the worth of the property, which will determine how much a lender is willing to give you to buy that property. The appraisal is done after the seller and buyer have settled on a price and the contract is signed. Having an appraisal protects both the buyer and the lender by ensuring that they do not overpay for the property.
When you are looking to sell your home, you may want to have your home appraised before you list it. This helps ensure that you are setting a realistic price for your home. It can also help eliminate the potential for contracts to fall through if the list price is higher than the buyer’s lender will allow them to borrow.
Even if you are happy in your current home, there may be times when you would need an appraisal. If you decide to refinance your mortgage, your lender will likely require the home to have a new appraisal. Appraisals are relied upon to determine how much property tax a homeowner must pay annually. If you think you are paying property taxes that are too high, or you want to donate the property to a charitable organization, an appraisal can be done to determine the current value of your property. A new appraisal may also be beneficial to homeowners wanting to take out a home equity loan, or when taking out loans which will use your home as a source of collateral.
How Do You Find a Reputable Appraiser?
Appraisals should be conducted by trained professionals who are licensed or certified to determine the value of a home in the state where the property is located. The appraiser is trained to look at the condition of the house and the physical characteristics, such as the number of bedrooms and bathrooms, the age of the house, square footage, lot size, and location. If you are a buyer, ask your lender to use an appraiser who is familiar with the area your desired property is located. Having an appraiser who is knowledgeable about your location can help inform their assessment of the property and make sure you are getting a fair deal. If you are a seller wanting to determine the value of your home, you can ask a lender, real estate agent, attorney, or accountant for recommended appraisers in your area.
What Should Home Appraisals Include?
It is important to understand that an appraisal differs from a home inspection. A home inspection specifically details the condition of most aspects of the property, such as the interior and exterior of the house and any structures on the property, utilities, grounds, sidewalks, and driveway, and states what needs to be repaired. The inspection does not determine a monetary value of the property, whereas home appraisals do.
A home appraisal typically consists of three parts: an inspection, market comparison, and final appraisal report. A licensed appraiser will schedule a time to visit the property and inspect the home. They will research similar homes in the area and compare recent sales in order to determine what the market value of the property is. This step involves looking at the asking and purchase price of comparable homes in the area, while taking into consideration specifics, such as the age of the house, finished and unfinished square footage, lot size, and features like garages and fireplaces. A new property’s value is often based on how much it would cost to replace the structure if it were destroyed plus the estimated value of the land. After the assessment is completed, the appraiser submits a report to the lender or home owner, which details their findings and supporting information for their valuation.
If you are looking to buy a home, or refinance your existing mortgage, Eastex Credit Union can help. We have excellent rates and terms and our friendly loan officers are also available to help answer any questions you may have. If you’ve got any questions, don’t hesitate to contact us, and click here to find out more information about Eastex CU’s mortgages and home loans.