What You Need To Know About Home Appraisals
No Surprises: Here’s What To Expect From A Home Appraisal
Appraisals are an important part of the homebuying experience for both buyers and sellers. The process of determining a home's value will give the seller an estimate of what they can expect to get for their home and a buyer will be able to determine whether or not they're getting the most bang for their buck.
This article is going to give buyers and sellers alike an idea as to what they can expect out of an appraisal and provide the necessary tools in order to get the most out of their home buying or selling experience.
So What Is An Appraisal?
An appraisal is a professional estimate of a home’s value. It’s not the same as a home inspection, which is meant to uncover any potential repairs or problems with the property. Appraisers are typically looking at things like recent sales of similar homes in the area, how much square footage the home has, the condition of the home, and any recent updates or renovations.
While a home appraisal is not required by law, it’s generally seen as a best practice for both buyers and sellers. For sellers, it can help ensure that they are getting a fair price for their home. And for buyers, it gives them some peace of mind that they aren’t overpaying for a home.
What Goes Into Determining Home Value
There are a number of factors that go into determining a home's value. Some of the most important things that appraisers look at are:
- Homes typically lose value as they age. This is especially true if they haven’t been updated or maintained well over the years.
- Generally, the longer it's been since a home was last sold, the less value it will have.
- If the cost of living in an area is high, then homes will typically be worth more.
- The opposite is also true; if the cost of living is low, homes will be worth less.
- If there are plenty of sales in an area, it indicates that homes typically sell at around their estimated value.
- If there’s a shortage of recent sales, this may indicate that people aren’t as interested in buying homes as they once were, and the home may be worth less than the estimated value.
- A home with a swimming pool, for example, will typically be worth more than one without.
- If the home has recently been renovated, this will add value to it.
- If there aren’t any major updates, such as central air or new roof, then a home is typically worth less than one that has been updated.
What Will I Receive In My Appraisal Report?
An appraisal report is a document that details the findings of an appraisal. This document includes a description of the property, information on recent sales of similar properties in the area, and the appraiser's estimate of the property's value.
The report will also list any major defects or updates that were found during the appraisal. This can help buyers and sellers negotiate better deals, since they will have a better understanding of what needs to be fixed or updated on the property.
What Buyers Need To Know
At the end of the homebuying experience, buyers will go through the closing process. Closing is the transferring of ownership of a property from the seller to the buyer. This process typically involves a number of steps, including:
- The buyer and seller agreeing on a price for the home
- The buyer getting a mortgage, if they don't already have one
- The buyer and seller signing the contract
- The buyer receiving the keys to the home
- The buyer paying the closing costs
Before proceeding with any real estate transaction, it's best to consult a real estate professional in order to ensure a smooth homebuying experience.
What Sellers Need To Know
As a seller, it's important to understand what can happen after the appraisal comes through.
If the appraisal comes in higher than the asking price:
- The seller and buyer agree to close at the contract price
- The seller may not renegotiate the contract with the buyer unless there is a stipulation to do so
If the appraisal comes in lower than the asking price:
- The seller may have to lower their asking price but is not obligated to do so unless noted in the contract
- The seller may have to renegotiate the contract with the buyer
If the appraisal comes in equal to the asking price:
- The seller and buyer agree to go close the transaction at the agreed contract price
So, now you know a little bit more about what goes into appraising a home and what to expect from an appraisal report. If you're thinking of selling your home, it's a good idea to have an appraisal done so you have a good idea of what your home is worth. And if you're buying a home, it's important to be aware of the appraisal process so you know what to expect. If you need more help navigating the homebuying or selling process, Nashville Real Estate Help can offer a wealth of information to guide you on your journey!