What’s the Process of Appraising a House and Condo?
Lenders under a mortgage loan process will request a home appraisal. How to request a house or condo appraisal and why.
In simple words, a home appraisal is a process that can help you determine the fair market value of a house. The primary objective of requesting a house or condo appraisal is to make sure whether or not the seller’s requested real estate value is appropriate.
However, for a beginner, the process might not be as simple as it sounds. This is because the process involves technicality, assessment, evaluation, and then valuation. For novice homebuyers who wish to make a one-time investment for their family, they will find the process exhausting. However, we have compiled the most important home appraisal aspects comprehensively for you.
Which Professionals Appraise a House and Condo?
For one, you have to remember that only highly-trained and qualified professionals can conduct a home appraisal. They carry licenses and appropriate certificates for the job. You will call a home appraiser professional if you want to request an appraisal for your chosen house or condo.
They perform an assessment, evaluation, and valuation of a real estate property based on current market conditions. Also, they will do so objectively without interference or any sort of bias. The location, condition, and current ask price of the property will influence the home appraisal.
Home appraising professionals undergo immense training, tutoring, learning, and, more importantly practice, to make perfect house valuations. Since it is their job to calculate a fair market value for a particular real estate property, you should know that no two home appraisers are the same. Hence, this declares that a home appraiser can be fallible.
However, you don’t have to worry about home appraiser prejudice. For misleading and false valuation, there are severe implications on their end. More so, the companies providing appraisal services and offering home appraisers operate with strict regulations, industry standards, and codes.
A House or Condo Appraisal Process – What Does it Include?
The mortgage loan borrower, i.e., you, will pay the fee for a house or condo appraisal. In California, appraisals usually range between $300 and $500, on average. The actual cost that you pay will vary based on the type and size of the property, the location, and other factors. Nevertheless, your home loan lender will have the greatest advantage through the house or condo appraisal. In simpler words, the process determines the fair market value of the house, and therefore, it keeps the lender’s interests safe.
Since it is an authoritative requirement of the industry that a home appraiser should carry the appropriate license and certificate, they also have to be familiar with all the local areas and their housing rules. Furthermore, as per the industry standard, the hired home appraiser should have no vested interest in the real estate transaction whatsoever when performing their duty.
Various factors affect a house’s fair market value. The sale of similar properties within the last couple of months and real estate market trends are some of those factors. Furthermore, when determining the fair value of the property, the appraiser will factor in the floor plan, floor’s functionality, bedrooms, bathrooms, square footage, and other qualitative amenities. Following that, the home appraiser has to perform a visual inspection of the house’s exterior and interior thoroughly. This usually helps to detect any property value defects such as needed repairs or any other conditions that affect the house’s value.
There are various measures for producing a report for a single-family home, duplex, and condo. Therefore, you may have to consider and inquire about that beforehand. The report will include information regarding the exterior and interior condition of the house. It will also describe the effect of surrounding houses’ sales during the last couple of months along with the state of the neighborhood. Lastly, the appraiser will perform an analysis and write an unbiased conclusion in the report according to their observations.
In a nutshell, here’s what the report will include:
- Street/neighborhood map outlining comparable sales and other appraised property
- Photographs of the house’s exterior and interior
- Process of square footage calculation
- Building sketch (exterior)
- Market sales data
- Public tax records
- Public land records
What Variables Does a Home Appraiser Include in the Process?
A home appraiser won’t stick to the characteristics, conditions, and features of the home involved in the real estate transaction. Rather, they will include other variables that will help to reflect a fair market value for the house or condo.
- Zoning description and classification
- Alley or street improvement (private and/or public)
- House/Condo value trends in the area
- State of the neighborhood
- All available private and public utilities
- House’s foundation (condition and material used)
- Houses’ interior inspection detail (material used)
What will the Home Appraisal Report Include?
A home appraisal report isn’t easy to comprehend since there is a lot of real estate jargon and technical terminologies. However, the on-site evaluation report to assess the condition of a property will take several factors into account, as discussed earlier. Take a quick overview of the most important things that a home appraisal will include in their report.
- Notations regarding all the existing and potential physical flaws in the property (along with those that need instant repairs)
- The acreage (i.e., location) where the property
- Detailed analysis on the condition of the property in comparison to other similar properties in the same neighborhoods or locality
- Home appraiser’s statements regarding all the issues and concerns that decrease the value of the property
What Can You Do If the Appraisal Report Appears Invalid?
If you have any doubt about a house or condo appraisal report, you can challenge the authority and make the home appraiser responsible for it. This usually occurs when you find information that doesn’t contain any relevance to the significant aspects of a property, such as the most valuable amenities or harmful property failures. The internal review system with most lenders is capable of identifying any misstatements in the report promptly.
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Conclusion
When you are making a house or condo purchase, home inspection and appraisal are the most important operations that should take place before a deal closes. Furthermore, to ensure that home appraisal goes smoothly and reveals a fair market value, you have to choose the right home appraiser. Often, reliable realtors and real estate agents can refer commendable home appraiser individuals or companies for your convenience. Be conscious of all the aspects of the property that you are viewing as the professional will outline every one of them to help you take a fair look at the property's real value.
Work with Alena Lehrer, DRE 02120134 Compass
Reference Links:
https://www.forbes.com/advisor/mortgages/how-home-appraisals-work/
