The Numbers Game
Websites like Zillow.com claim to provide estimates of what your home is worth, and while this estimate might be somewhat accurate, the only way to get a true assessment of the value of your home is to have an appraisal done by a certified third-party professional. There are a few situations where an appraisal is mandated, such as when you’re buying and selling a home, refinancing or applying for a loan using real estate as security.
The appraiser’s report can help determine a selling price, and it can provide owners with information about problems that are devaluing the home’s worth and give insight about worthwhile fixes. Appraisals are usually conducted after an offer has been made or to determine the initial value of a home as part of the selling process.
Keep in mind that to approve a loan, banks typically require an appraisal using their preferred appraisers to ensure the most accurate assessment, even if you’ve already had one done by another party. The appraisal offers side-by-side comparisons of the home, along with three similar properties and an evaluation of the overall real estate market in the area. The appraisal will also note flaws in the property, such as a crumbling foundation, and offer specific dimensions pertaining to the home, such as the square footage and the size/number of rooms.
The appraiser will also research the area’s costs of labor and local building costs to determine how much it would cost to erect a similar property in the present economic climate. Things such as the home’s location and nearby amenities are taken into account to increase or decrease the value of the home — for instance, proximity to a school zone or within a neighborhood might be an increase, while being situated near a busy highway or isolated from the community could be a decrease. These factors, among others, will be used to estimate an approximate time frame for selling the home, which is also included in the appraisal.