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When you are purchasing a home, you will notice that there is someone who comes to the property that you are about to buy and inspects the entire unit. This inspection must be completed before you can close on your new home. The process exists to protect both you and the seller. The results from an appraisal give you an idea of the worth of the home and stops you from overpaying for the home you want to buy.
In this post, we will look further into appraisals and what to expect when the process begins.
What Is an Appraisal?
A property appraisal is a process where someone who is certified in determining the market value of a home comes to your home and helps determine what it is actually worth. Once you know what your home is worth, it will help you sell it and help the buyer ensure that they are paying a fair market price for the home. Most banks and financial institutions require an appraisal to be done on a home before they are willing to lend buyers money for a mortgage in order for them to purchase (or sell) a property.
Appraisals are also completed and filed within the jurisdiction in which you live. The reason for this is to help determine what the property tax on your home will be. The property taxes you pay will influence how much money you pay for your home each month as part of your mortgage payment.
What Do Appraisers Look at in a Property?
When an appraiser views a property, they look for a variety of different factors related to a specific structure. The following are some things that your appraiser will look at when evaluating a property that you want to buy (or sell) and include in their report:
- A street map showing the appraised property and comparable sales used
- An exterior building sketch
- An explanation of how the square footage was counted
- Photographs of both the front and back of the house as well as the street view
- Front exterior photographs of comparable properties priced and sold in the neighborhood
- Other pertinent information related to the property (public files and data for property taxes)
These individual pieces come together to make up the fair market value of the home, or a fair price the buyer should be paying for a property based on the home's current condition and its value on the market in the area at that time.
What Does an Appraisal Cost?
The average appraisal cost for a single-family home will run between $300 and $425, depending on labor rates and your local market. The appraisal value for a multi-unit family home will start around $500 and go up depending on how many units are in that building.
Conclusions:
Appraisals are there to protect both the buyer and seller from getting "ripped off" when a home is sold. These appraisals ensure that you are getting what you pay for, and not something that falsely advertised when the previous owner sells their home.
For more information on getting your property appraised to sell, or getting a property appraised that you want to buy, please feel free to contact us at First Savings Mortgage for more information. We are here to assist you in getting a preapproval and an appraisal in order to purchase a home that meets your needs and budget.