Have you checked your home’s value lately? With the average home in the US now valued at over $387,000 as of November 2023, most homeowners are sitting on a goldmine without even realizing it. But in this unpredictable market, your net worth could change overnight only if you get a home appraisal.
This is like stepping on the scale after avoiding it for years – the number may shock you.
An appraisal gives you an unbiased second opinion on your largest investment from an expert. And about 90% of real estate transactions require one, after all.
But, what exactly is home appraisal and the benefits it offers? Continue as reading as we dive into this.
What is a Home Appraisal?
A home appraisal is an unbiased, professional opinion of a home’s market value. An appraiser (a qualified real estate professional) thoroughly examines the home inside and out. They look at similar homes sold recently in the same area to help determine the property’s value.
The appraised value gives home buyers, sellers, real estate agents, and lenders an independent, factual valuation to inform negotiations, listing prices and more.
Why Get an Appraisal?
Getting an appraisal can lead to thousands of dollars in savings and prevent costly mistakes. Here’s why it’s so important:
Learn Your Home’s Value
Home values fluctuate often based on market conditions. An appraisal gives you an up-to-date estimate on what your home is truly worth right now. So, whether you’re buying, selling or just curious, an appraisal takes the guesswork out of valuing your largest asset.
Make an Informed Offer
As a buyer, you can use the appraisal to guide your offer amount and negotiations. And as a seller, you can use it to price your home competitively.
Having an appraisal in hand leads to more grounded, data-driven home pricing and purchasing decisions.
Lenders require appraisals to approve loans and favorable rates. They want to ensure the home is worth at least the loan amount before taking on that financial risk.
Meeting or exceeding a lender’s appraised value requirements is key to locking in your dream home financing. Up to 10% of mortgage deals fall through due to low appraisals.
Understand the Local Market
Since appraisals analyze recently sold homes in the surrounding area, they give great insight into local market trends.
You’ll learn whether home values are rising, declining or stabilizing right in your specific neighborhood. This helps immensely whether you’re buying or selling.
How Appraisals Work
When you order an appraisal, here is generally how it goes:
Appraiser Visits the Home
A licensed local appraiser will schedule a time to walk through your home, inside and out. They’ll measure rooms, assess layout and take photos.
Compares to Similar Homes Sold Recently
The appraiser researches homes with similar locations, sizes, ages and features that have sold recently. This comps research is key to valuation.
Considers Home Features and Condition
Unique home features like renovations, pools and view opportunities can add value. But wear, tear and dated aspects may detract value. The appraiser accounts for it all.
Provides a Professional Opinion of Value
Finally, the appraiser analyzes the data and provides a thoroughly researched fair market value for your property. Lenders require the report meet industry standards too.
When to Get an Appraisal
Common situations when appraisals are needed:
Before Buying or Selling a Home
Know your home’s current value before listing or making offers. The small upfront appraisal cost can save you thousands later.
When Refinancing Your Mortgage
Ensure you meet lender requirements before starting the lengthy refi process.
During a Divorce
Get impartial insight into your home’s value to divide this major asset equitably.
Getting an appraisal is like doing a home checkup – the peace of mind is invaluable both financially and emotionally. Don’t make big decisions blindly without understanding your largest investment’s true value.
Home appraisals give buyers, sellers and homeowners unbiased insight into one of their biggest financial assets. While requirements vary, most real estate transactions involve appraisals to set pricing, secure favorable financing and more.
However, knowing your home’s current market value and how it compares locally helps you become a more informed, empowered decision maker.