Home appraisers use three factors when offering a valuation on your home:
• Market: Current conditions in the marketplace
• Property: Overall condition and specs of the property. An appraiser will take into account any repairs or upgrades needed that might affect the livability or pricing of the property
• Comparables: Other homes that have sold recently in the area
Appraisers are used by lenders to accurately determine a home’s real value so they can limit their risk when providing mortgages. If a home is valued for more than it’s actually worth, a lender risks losing their money if the homeowner defaults.
While appraisals are extremely accurate as to a property’s value, it doesn’t always mean that the appraised value will match the selling price. Home buyers will often use an appraisal after an offer has been made in order to reduce their final cost. Home sellers however, don’t always need to agree to those conditions and can stick to their asking price.
• A fairly accurate assessment of real market value and how much a lender will loan you for a mortgage on the property
• Home appraisals can alert a property owner to any substandard conditions that may affect a home’s value before listing a property so they can fix those issues before selling the home to get the highest possible price for it
• Takes current market conditions into consideration
• Cost. Home appraisals usually cost around $400
• Doesn’t reflect what the actual selling price might be
• May be heavily influenced by lenders or a home owner’s goals rather than an objective measurement