What does a Real Estate Appraiser do ?
There are many reasons why you need a real estate appraisal.
Reduce property taxes, probate, estate planning, divorce settlements are some.
The most common one is to obtain a mortgage.
Most lenders are required by federal and state laws and current banking regulations to obtain an appraisal for most loans secured by real estate.
As of Jan. 1, 1993, all appraisals made for mortgage loans from federally insured lenders and other federally related transactions must be made by a licensed or certified appraiser.
What is a Appraisal?
An appraisal is an objective supported opinion of value of an adequately described piece of property made by an appraiser who has sufficient knowledge, training and experience to accurately estimate its value.
In this detailed and time consuming report, appraisers use comparable sales together with information about the property being appraised, its neighborhood and community along with the local and national economy, to support the appraised value.
How is Value Established?
The value of a house is based upon recent sales of the similar neighboring homes in the market as well as rentals and listing data.
Ideally, appraisers want to use sales of properties of the same size, age, room count, condition and with similar amenities and external influences. This rarely happens though, so adjustments have to be made, based on what people will pay extra for.
Examples: extra square footage, bedrooms, fireplace, upgrading, parking facilities, swimming pool, lot size, location and so on. To help get a better picture, this information is entered on a form, a value for differences is established and comparisons are made to the subject property.
A minimum of three verified closed sales with photos are required to establish a value.
Houses Appraise for More When:
- Well maintained inside and out.
- Located in a good school district.
- Any Additions are done with the proper building permits.
- Additions conform with and fit well into the existing house.
- Properties throughout the neighborhood are well maintained.
- Zoning changes are not expected or there is not a mixed use.
Remember: Location, location, location.
You can change everything about a house except it's location. This is one of the most important items in an appraisal.
What is Poor Location?
- Located on a busy street.
- Under an airport flight path.
- Center of night life activities.
- In a rundown block or neighborhood.
- Next to a commercial property.
- Next to a gas station, near a municipal garbage or toxic waste dump.
- Odors from factories, farms and processing plants are routinely noticed.
- The city is affected by the closing of a major employer.
Think about Selling - When You are Buying.
Location is a big factor in a home's appraised value. This is most notably felt at the time you sell or refinance. What seems like a bargain when you buy might turn into a real headache when you try to sell.
Drive around the neighborhood and note any adverse conditions.
You may think you can live with something adverse for the price, but when it's time to sell you might find buyers won't.
Buying a House with an Addition?
Verify that it was built with a permit prior to closing the sale.
Don't just accept the sellers word. Get copies of the permits before final sign off.
Should you want to refinance or sell at a later date, and the appraiser cannot verify the addition being permitted, no value should be given.
The result: no new loan or worse . . . no sale.