What Are Home Appraisals?
Your home appraisal is a very important component of the entire processes involved in buying a new home with a mortgage, refinancing your old mortgage, or selling to a non all-cash buyer. Whether you are the homeowner, buyer or seller, there is need for you to understand the entire process of home appraisal and how the appraiser determines the value of your home.
So what does home appraisal really mean?
An unbiased evaluation of the worth of any home is what is known in real estate as an appraisal. All home sells and purchase transactions go through appraisals, it is also used in some refinancing deals. In any sale or purchase deal, an appraisal determines whether the contract price of the home in question is suitable considering factors such as the condition of the home, its features, and location. In refinancing, appraisal is used to determine whether the borrower is borrowing more money from the lender than the real worth of the home.
Since the home is used as the mortgage collateral, every lender wants to ensure that the homeowner is not taking more loans than the home is worth. If the homeowner defaults on the terms of the mortgage at any time and settles for foreclosure, the lender can easily recoup the money by putting the home up for sale. In the worst case scenario, the bank is kept safe from lending more than it can get from the home sale through proper home appraisal.
The Process of Appraisal and The Determinant Factors Of The Appraisal Values
The lender usually orders for the home appraisal because it mostly protects his interests. The national association of real estate appraisers mandates every professional appraiser to be certified or licensed and know the local area quite well. According to federal regulations, an appraiser must never be partial, and must have no personal interest in the transaction.
Some factors that influence the appraisal value of any home are the market trend and recent sales of homes that are similar to the home in question. The home features, number of bedrooms, living rooms, bathrooms, kitchens, floor plan functionality and the square footage equally play important roles in the determination of the value of the home. The appraiser is required to carry out a thorough visual inspection of the home interiors and exteriors to spot any conditions such as areas that can alter the value of the home if left unrepaired.
At the end of the home appraisal, the appraiser gives a detailed report of the home worth. The report usually include a map of the neighborhood, a picture of the home, a detailed description of both the home interior and exterior, any recent nearby comparable sales, and a professional analysis and conclusion of the home's values based on the appraiser's observations.