An appraisal is necessary for every segment of businesses. It’s quite like an inspiration that boosts the performance with upgrades. Without appraisals, the performance would continue to be stagnant, substandard or below average. Productivity would take a hit and efficiency would go for a toss. As applicable as it sounds to employees in every industry, it is equally applicable to real estate markets too. This article talks about why the appraisal for the real estate markets is needed and how can one appraise their property.
Understanding Real Estate Appraisal
Firstly, it is important to understand the basic definition of real estate (or home) appraisal. It is an impartial expert opinion of the value of a home or a property and is used whenever a mortgage is involved in buying, refinancing, or selling that property. These kinds of appraisals are mostly used in purchase-and-sale transactions and can be commonly seen in most refinance transactions.
An appraisal in the purchase-and-sale transaction is used to ascertain the appropriateness of the home’s contract price in terms of the property condition, location, and features. When it comes to a refinance transaction, the lender is assured by the appraisal that the borrower gets money that’s appropriate to the home’s worth.
Agent vs. Appraiser
There might be a lot of us who think they are one and the same and they share the same job description, but they are indeed very different from one another.
A professional property appraiser is expected to act independently and unbiased from the buyers and sellers of the property involved in the transaction. An appraiser determines the market value of the property based on observations, relevant market facts & figures, and other information.
On the other hand, a real estate agent favours the seller (real estate developers, predominantly) to sell their properties at an incentivized rate. The incentives are further shared in the form of commission, sale value, and other variables.
Contents of an Appraisal Report
Now that we know what real estate appraisal is, and who is an appraiser, let’s take a look at what goes into making an appraisal report.
- A location map that shows the appraised property and comparable sales used
- A blueprint sketch of the exterior building
- A logical explanation of how the sq.ft was calculated
- Photographs or architectural renditions of the home’s frontier part, posterior, and surroundings
- Photographs of the property’s front exterior of each comparable property used
- Annexures including other relevant information such as market sales data, public land records, and public tax records, any data that the real estate appraiser would require to determine the property’s fair market value
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