An home appraisal is an opinion of worth of an item of value, whether it is a diamond, an automobile or your house. Depending on the size of your house and your location, a professional appraisal should cost somewhere in the $350 to $500 range. For your investment, you will get a complete analysis of the estimated value of your home. Factors such as condition, proximity to services, and overall neighborhood values all will all be taken into account. There are three general approaches to determining the value: the cost (or replacement) approach, the comparison approach, and the income approach. (Unless your property is commercial or a rental property, the income approach will not apply). In the cost/replacement approach, a determination is made as to what the cost would be to replace (rebuild) your home in today’s market. In the comparison approach, the appraiser will, as in a CMA, determine what comparable properties have sold for in the last 6 months to a year. This approach will directly compare your house to these other properties, adding to value for special items that your house has, or deducting value for items that your house lacks (in relation to the comparables). In all likelihood, this comparison approach will give you the most accurate estimation of the worth of your house.
Common Questions about Home Appraisals
If I pay for an appraisal now, will the buyer be able to use it? A couple of factors will determine whether or not a buyer can take advantage of your appraisal. The most important lies with the policy of the lender which will be handling the buyer’s financing. It is completely within the lender’s rights (and more than likely) that they will want to order a new appraisal. In addition, there is the question of timeliness. If you have a professional appraisal done now and it takes 4 months to get a contract on your house, it is probable that the lender will require a more recent appraisal.
Is the value locked in stone? Absolutely not. A home appraisal, no matter how scientific, still ends up being the professional opinion of the appraiser. The appraiser must compare, for example, the condition of your house in relation to the comparable properties, which to some degree is a judgment call. Nevertheless, an appraisal will give you a reasonably good idea where your house fits in relation to recently sold properties. From that point you are well on your way to setting a fair price.
Where can we find an appraiser? You will need an appraiser in your local area, so you can check your yellow pages. Online, a service such as ServiceMagic offers a free service to locate appraisers in your immediate area. More information.