A home appraisal is a professional judgment of the value of your home, usually when you’re refinancing or buying a new home. It’s based on comparable sales, property and neighborhood characteristics, and local economic conditions.
How a Home Appraisal Works
Home appraisals are performed by a qualified appraiser and are generally used by a lending institution to determine the value of your home. Several appraisals may be required to determine the value of your home properly.
It’s also common for lenders to do a formal appraisal for a borrower’s property for a mortgage refinance, although maybe not in all cases. In addition, lenders may require an appraisal for a home equity loan or second lien and a home equity line of credit (HELOC).
After an appraisal is complete, most lenders will provide the homeowner with an appraiser’s C.V., which shows the appraisal methodology used, if requested. If a lender has a policy of not providing an appraiser’s C.V., it must be disclosed to the borrower.
Factors That Influence the Appraisal Value of a Home
An appraiser considers several factors that influence the home’s value:
- Comparable Sales. An appraiser must thoroughly research the comps or similar. Comp sales are an essential factor because they provide an apples-to-apples comparison.
- Property and Neighborhood Characteristics. An appraiser will inspect the interior and exterior of the property and document the condition, age, and type of the home, the number of bathrooms, the quality of the neighborhood, and other factors.
- Local Economic Conditions. The appraiser will also consider current economic conditions when determining a home’s value. This includes the general health of the local economy and the impact of current and future development.
The Appraisal Process
A home appraisal can occur very quickly if you’re selling your home or as long as three weeks if you’re planning to buy a new home.
It begins with a home appraisal consultation, which can occur in person, online, or by phone. An appraiser will discuss what will be done and how much it will cost. If you’re refinancing and a repeat customer, your lender will likely pay for the appraisal.
In a walk-through of the home, the appraiser will measure the home’s interior and exterior, take notes, and inventory the home’s features. The appraiser will also check the home’s condition, often using a ten-point condition scale. The appraiser will verify that the house is unoccupied. The home’s title will be reviewed, and a search will be done to ensure the home doesn’t have an undisclosed lien or encumbrance.
The appraiser will research comparable homes in the neighborhood and review local economic conditions to determine the home’s fair market value. An appraiser will also consider the condition of the home, local economic conditions, and market trends. The appraiser will then provide you with a market analysis, an estimate of the value of the home, and an appraisal report.
Your Experts at American Mortgage Solutions
A home appraisal is an important part of the home buying and home improvement processes. It’s important to remember that an appraisal is only one opinion of value, and it’s not a guarantee of the final sale price.
American Mortgage Solutions is a mortgage broker that has financed home buyers’ and homeowners’ dreams! We are proudly licensed in and serve Florida, Kentucky, Indiana, Colorado, Missouri, Kansas, and Tennessee. We’re here to make the mortgage process itself a dream, quickly and easily matching you with the ideal loan for your needs. Our streamlined process makes it a breeze to buy a home, refinance, or tap into your home equity. If you need a mortgage loan in Cape Coral, FL, we’ve got you covered! Call us at (239) 766-8344 to explore your options!