What Goes Into a Home Appraisal?

What Goes Into a Home Appraisal?

A home appraisal is a crucial part of the real estate process. Whether you are buying a new home or selling your current one, or even if you are simply mortgaging your current property, a home appraisal is needed to let all interested parties know what your home is worth. It is carried out in person, by an unbiased professional to make sure that it is fair and based on the key criteria rather than any personal opinion. The appraisal fee, which is usually a few hundred dollars, is usually paid by the party borrowing money against the value of the property.


Why Is A Home Appraisal Needed?

A home appraisal is needed because lenders want to ensure that homeowners are not borrowing more money than their property is worth. This is important since the property serves as collateral for the loan. If the homeowner defaults on the loan, the lender will want to be able to sell the property to recoup the money that is owed without being out of pocket.


Your lender will use the appraisal to protect itself against lending more than it might be able to recover should the homeowner fail to meet their financial obligations. If the appraisal value comes back lower than expected, the homeowner may not be offered a mortgage for the necessary amount needed to purchase the property.


Things A Home Appraiser Will Consider When Valuing Your Home

In the majority of circumstances, your appraiser will use several different criteria to determine the value of your home. These are:


The location of your property: the more desirable your area is, the better this will reflect in the value of your home. The appraiser will also be focusing on homes in close proximity to your home in order to find the most appropriate comparables.


The age of your property: the age of your home will also be a factor in your home appraisal value, although a newer home won’t necessarily always be appraised higher than an older home.


The condition of your property: the condition of a property is a very important part of a home appraisal. Homes that are in poor condition are worth much less than those that are in good condition and require little if any work to make them suitable to move into.


Additions/renovations: according to a study for the National Association of Realtors, every 1,000 square feet added to the size of a home can increase its sale price by as much as 30%. This means that if you had made any additions, such as an extension to your kitchen or if you’ve built a games room, you could expect to see the value of your property increase. Similarly, any recent renovations could prove a valuable investment, with the kitchens and bathrooms the most desirable room upgrades sought after by buyers.


The curb appeal of your property: it’s crucial to never underestimate the power of curb appeal. It doesn’t matter how great your home looks online if when people drive past or arrive for viewing it looks like it’s untidy and uncared for. You’ll want to make sure that any improvements don’t go above and beyond what’s normal, but that they do help your home reach its maximum potential value.


The market conditions at the time of sale: is an important factor when the appraisal is being process for the home's sale. The appraiser will consider whether it is a highly competitive market where prices are projected to increase over a short time frame or if the market is cooler and values are plateauing or declining.

When an appraiser presents their report, they include much more than just the estimated value as a figure. Appraisal reports also include:


  • A sketch of the building’s exterior

  • A street map that shows the property being appraised and the comparable sales used as part of the valuation process

  • An explanation as to how the square footage was calculated

  • Photographs of the front and back of the home, along with the street scene

  • Front exterior photographs of each property used in the comparison

  • Any other data that is relevant, such as public land or tax records or market sales data



If you have any other questions about home appraisals, visit Altmann Ayala Realty Team in San Diego, CA. Call 858-216-2700 to schedule an appointment today.

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