Important Things about Residential Appraisal
Home appraisal will serve a great purpose in the business of buying or selling a home where an expert’s opinion is needed. 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. Such undertaking is a requirement in a mortgage process. 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. Home appraisal is thus an important tool for a buyer and a lending bank to avoid losses.
Every lending institution will provide a list of property certified and licensed appraisers who have worked with the entity. 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. One of the methods is the cost approach and the other is a sales comparison 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. The comparison is done on the features of these houses and the one in question. The main things brought onto the table are the lot size, square footage, different components and features of the house.
The other way of determining a house value is through the cost method. 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.
Every final appraisal report should contain the following details. The appraiser should explain how the final value was arrived at. The appraisal formula is what is what is brought into light here. The appraiser should also give all the features of the house, describe it fully and also cite the things that have been done on the house to increase its value. Important features that will add on the value of the house and that are valuable should be given.
The appraiser should include the structural problems, the issues in the basement leaking and foundation. Appraisal report should give some space for a detailed description of the neighborhood area. 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.