With this crazy hot market, I’m getting a ton of questions around appraisals. Ever heard of one? If you’re asking yourself what is a real estate appraisal? You’re already ahead of the game. Many home buyers get so caught up with getting their offer accepted, they forget the home must appraise for them to get their loan!
What is a real estate appraisal?
An appraisal is an unbiased assessment of the overall value of a property. They are required by MOST lenders before they agree to give you a loan on a property as an objective way to assess a home’s fair market value. There are some exceptions to this, but if you’re a first time home buyer or using your VA benefits, you can bet you will more than likely need an appraisal.
Who conducts the appraisal?
Appraisals are conducted by licensed professionals who are trained to determine the value of a home fairly and objectively. Appraisers go through extensive training, generally have many years of on-the-job experience, and are required to take continuing education courses. Appraisers and their employers are heavily regulated. Meaning, there are severe consequences for issuing misleading or biased reports, so Appraisers work hard to remain impartial.
How do they come up with the value?
Appraisers have 4 main guidelines to appraisal:
- Distance
- Time
- Size
- Condition
Each of these factors are heavily considered in order to give the appraiser an accurate value of the property. For any home my clients want to offer on, I do a full work up (just like an appraiser) so there are no surprises once the home is appraised. My clients will know exactly what to expect when we get that appraisal back!
Appraisals are super important because, who wants to over pay for a property? I take that back… some people do because it truly is the RIGHT home. Although, you surely would want to know you’re overpaying and have the extra cash on hand before you sign a contract, wouldn’t you? Understanding values and being able to teach my clients how the appraisal process works eliminates a lot of questions and uncertainty in the already complex process of buying a home!
Bottom line
Having an agent who understands appraisals will help you to make a competitive offer & give you peace of mind through the escrow process. If you have any real estate related questions please send me a message & I’ll feature your question in my next video.
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