Reasons for Home Appraisals
Residential appraisals is a step in-house transactions where one is buying or selling a house. Most banks will demand a home appraisal that will give the value of the home before going ahead to lend the buyer any amount. Such undertaking is a requirement in a mortgage process. For a seller who has priced the house at a price higher than what the appraiser has determined, the bank will not lend the money to the buyer the total amount the house cost according to the seller. Just like the buyer don’t want to buy something at a price higher than the market value, the bank too will not want to lend to the buyer more than what the house value will cost. Home appraisal is thus an important tool for a buyer and a lending bank to avoid losses.
Most of these banks will give you a list of certified and licensed professional appraisers who will determine the value of the home. These expert appraisers often do the work with consistent accuracy of the pricing but the amount to be borrowed will depend on the buyer. Professional appraisers have two different approaches for them to find the value of the house. The first is the sales comparison approach and the cost approach.
The comparison method determine the value of the home by comparing it with the other houses in the neighborhood that were recently sold. The features that the house have are weighed together with those of the recently sold 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. The idea is this method is the cost that will be required to build a similar house in case the one to be sold was destroyed. After that cost has been determine, the next focus will be on the worth of the land and also the depression value to determine the final price.
A good appraisal report has this content. There should be a well-described procedure of how the value of the property was determined. Here, the procedure of price determination of the property is elaborated in details. The report should also contain a description of the house and anything that has be done to make it better. The appraiser should ensure that all the important features are not left out in the description.
Various structural issues should be reported, including leaking in the basement or foundation. The surrounding neighborhood should also be described in the report. A comparative market analysis that will support the appraisal summation is important. The report should include a photograph or a map of the whole property.