What is an Appraisal?
An appraisal is a process which aims to establish the value of something of significant value such as a property or antique. An appraisal must be authorized by a regulator that governs the field in which the appraiser is a specialist. Appraisals are often used to assess the value of an item or property for taxation or insurance purposes. The person who carries out an appraisal is typically a trusted impartial expert in a profession closely related to the item being valued. For example a building surveyor would be considered an impartial expert who could carry out an appraisal on a property and inspect the property for faults and factors which would impact the value of the property. The findings of the appraiser would be considered as fact by insurance companies and mortgage lenders and consequentially impact on the buyer/seller offer negotiations. Mortgage lenders will likely decline to finance a deal if a home appraisal comes in lower than the offered purchase price. The transaction would likely not go ahead if the buyer cannot afford the difference between appraised value, lender financing offer and actual purchase price.
An appraiser may use any of a variety of valuation methods in order to value an item. They can also compare the market values of comparable properties and objects to establish an estimate. Appraisals are also a useful method for settling disputes between the heirs of an estate and can performed to establish the value of the property and the personal property to be divided. The Divorce Attorney content section explains this in greater detail.
Different types of appraisals
Real Estate Appraisals
A home appraisal is required when buying or selling a house, and also for refinances of existing mortgages. Refinance refers to when an existing loan or mortgage is updated with current interest rates and terms. A real estate appraisal is used to determine the value of a property. This ensures that the age of the property and its condition are accurately reflected in the final sale price. It also takes into account other factors such as the number bathrooms and modifications made to the property which improve or hinder the value of the property. An example of a modification which may improve the value of a property is the addition of a swimming pool. Appraisals are also methods utilized by banks and lenders to avoid needing to lend more money than what the property is worth. The appraisal is also used by banks to value the property in the unfortunate case of a mortgage default. This happens when the borrower cannot make their monthly mortgage payments and can result in the bank taking possession of the property if the homeowner continuingly defaults on payments. This will also negatively affect their credit rating making it harder to take out loans or future mortgages. Remember that a bank will lend the entire amount which the property is worth to the seller when it issues a mortgage. The bank pays out the loan amount and in return the property owner promises to repay the bank monthly with interest. The bank can use the valuation to help avoid losing money and to protect it against the possibility of the borrower defaulting.
Collectibles or Antiques Items
Many items can have professional appraisals such as antiques and collectibles. An accredited professional in a particular specialist field would provide an unbiased appraisal on the antique and would be paid either hourly or a flat fee. It is a good idea for the owner of an antique to seek the appraisal of more than one expert when looking to establish the value of something as significant as an antique. An appraiser will be more impartial and fair when working out the value of an item than a local shop, which may have an incentive to sell you the item for significantly less. Online appraisal sites and magazines can also provide antique owners a rough estimate as to the worth of an item. Many websites will charge likely charge you a fixed fee to appraise your item. Although this would not be an official valuation which you might not be able to trust, it can be cheaper and more convenient way of establishing the value of an antique before seeking the expertise of professionals. The American Society of Appraisers is an excellent place to start your search for an appraiser if you are interested in getting an antique appraised.
Appraisals and insurance
Certain types of insurance policies require that domestic or commercial goods be appraised before they are covered by insurance. Policyholders of renters or homeowner insurance are protected against personal property being stolen, damaged, and lost. The policies are blanket and cover up to a predetermined dollar amount. An appraisal of the contents in a house is a way to establish its value and create a digital inventory. This helps ensure that a claim can be settled quickly. If the homeowners policy is limited to a certain amount per item and homeowner may want to take out luxury item insurance which covers the costs of antiques or collectibles. Many insurance companies require that high-end objects be appraised before they issue personal property insurance policies. An appraisal is a document that records the existence of an household item and its details. This helps to establish the realistic value of an item. An appraisal clause is a provision in insurance contracts that states the owner will obtain an appraisal from an expert who agrees with him or her in case of dispute. A neutral appraisal can be a speedy way to resolve disputes and prevent them from spiraling into expensive and lengthy lawsuits.
The Home Assessment Process and the Cost
The appraisal of a home usually begins when a buyer offers to buy a house and the seller accepts that offer. Although the broker or mortgage lender may request an appraisal, the buyer will usually have to cover the cost. An average home appraisal costs $300 to $450 for single-family properties, while multi-family appraisals can cost around five hundred dollars. After the appraisal has been ordered, an appraiser will arrange a visit to the property. To determine the value of the property, the appraiser will conduct an in-depth inspection of both the exterior and interior of the house. They may need to measure the home or take photos. Appraisals may take anywhere from a few minutes up to several hours depending on how detailed the property is and what the appraiser uses. The appraiser will visit the property and use all the data they have to make a fair estimate of the worth of the property. The appraiser will then compare the home to determine the value. The appraiser will use these comps as well as the information gleaned from the visit to the house, and prepare an appraisal report which includes a number that represents the perceived value of their home. The buyer is given a copy of the appraisal report and so is the mortgage lender. The report can be completed and sent out in as little as a week or ten days.
How to Improve the Appraisal Value of Your House
Although the appraisal process is neutral, appraisers can make recommendations to help property sellers passively improve the overall value of their home. It conveys a feeling of a well-kept home by keeping your property clean and tidy. This can be done quickly and easily, depending on how big your house is. You can quickly increase the value of your house by using simple methods, which are detailed in our real-estate content section.