Important Things about Residential Appraisal
When buying or selling our homes, it is often a good idea to get a residential appraisal expert to appraise our homes. Banks and other financial institutions will use a home appraiser to determine the value of a residential home for them to decide on the amount they will lend the buyer. Mortgage process isn’t complete and may not even be done if this step is not followed. In case the seller has overpriced the home, say at $500,000, but the expert appraiser has valued the property at $425,000, the bank will not accept to lend the full amount demanded by the seller to the buyer. These financial institutions will want to see that the buyer and the bank are investing in an amount that matches the market value of the property. This appraisals therefore protects both the buyer and the bank.
Most of these banks will give you a list of certified and licensed professional appraisers who will determine the value of the home. The appraisers are approved an trustworthy because of their expertise in the job, but the amount to be borrowed will depend on the buyer of the house. Home appraisers uses two methods to establish the value of the property. Sales comparison approach is one these appraisers use and the other is a cost approach.
Just like the term refers, comparison approach is where the house to be sold is compared with those that were sold recently in the neighborhood. Various features of the house are scrutinized and compared with the features of these other houses. The main things brought onto the table are the lot size, square footage, different components and features of the house.
Cost method is another approach where new houses are valued based on reproduction cost. Here, the cost of a new house that can replace the standing one is brought into question. When the cost has been determined, to get the final value, the cost of the land and depreciation is brought in.
Every final appraisal report should contain the following details. The appraiser should explain how the final value was arrived at. It is a must for the appraiser to give a step by step in the method he/she used to determine the house value. The house should also be described well, with its features and the improvements that have been done. There are those big investments in the house and such features should be describe.
Various structural issues should be reported, including leaking in the basement or foundation. The surrounding neighborhood should also be described in the report. There should be a comparative market analysis to sum up the property valuing. There should be a picture of the property or a map that describes the aspects of the property.