Regardless if you are selling a property at full value, or buying one at a value that is lesser than the full value, having a truthful real estate appraisal becomes a crucial aspect of that transaction. However, the appraisal should not be interpreted as the exact picture of a property’s market value. The main purpose of real estate appraisal relates to providing lenders with the assurance that the value of the property can cover the amount of the loan, which it is being applied for.
Most of the time, lenders will already have a specific appraiser that is assigned to the properties that are in your area. And sometimes, you can even be the benefit of having to choose an appraiser of your liking from a list provided. The more the lender is acquainted with the property appraiser, the loan application will be processed even faster.
A proper real estate appraisal will involve the full details of the all the criteria that were taken into account during the property’s evaluation of value. The data will usually involve things such as property features data, local sales data, and an estimate of the average time it takes to sell similar properties in the area. The features of the property may be altered to accommodate unique architectural designs, special improvements, or improve road accesses. If there is a private road access in the vicinity of the property, most of the time the lender would need to have an agreement regarding keeping the private road intact.
A usual misbelieve is that of inspectors and appraisers being the same and synonymous. But in reality, the two have distinct jobs. The one thing in common between the two is that their job involves looking at properties. The inspector is tasked with finding any flaws that are present on your property as opposed to determining its value like what an appraiser would do. Just keep in mind that inspectors are just there to check whether the property is in accordance to the codes or have any damage, while the appraisers see how much it is worth.
The property’s value that the appraiser would come up with is based on the properties in the same area that were recently sold and are similar to the one you own, any code upgrades and repairs will hurt the property’s value, and the property’s possibility of generating revenue will also be taken into account. Usually the first thing that will be disclosed is the appraisal fee. An appraiser who cannot provide you with an estimate is a big red flag. But if the lender already has an appraiser chosen, then the appraiser’s fee will be taken care of the lender with their own funds.