Important Things about Residential Appraisal
When buying or selling our homes, it is often a good idea to get a residential appraisal expert to appraise our homes. Often, most lending institutions will use this professional to estimate the value of the home before lending any money to the buyer. This is a part of a mortgage process that is very crucial. For a seller who has priced the house at a price higher than what the appraiser has determined, the bank will not lend the money to the buyer the total amount the house cost according to the seller. Just like the buyer don’t want to buy something at a price higher than the market value, the bank too will not want to lend to the buyer more than what the house value will cost. This appraisals therefore protects both the buyer and the bank.
Most of these banks will give you a list of certified and licensed professional appraisers who will determine the value of the home. This pool of professional appraisers ensures consistent results, but it will be upon the borrower to quote the price he/she wants to borrow. There are two ways an appraiser can determine the value of the property. Sales comparison approach is one these appraisers use and the other is a cost 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 features that the house have are weighed together with those of the recently sold houses. 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 basis is that of how much such an house will cost to build if the standing one was wiped out. When the cost has been determined, to get the final value, the cost of the land and depreciation is brought in.
A good appraisal report has this content. There should be a well-described procedure of how the value of the property was determined. It is a must for the appraiser to give a step by step in the method he/she used to determine the house value. 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.
Any structural problems should be reported be it leaking or any other. 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. The report should include a photograph or a map of the whole property.