Real estate investing has many crucial components, and one of them is a home appraisal.
Knowing the worth of your home can give you an advantage when buying or selling your home. This way, you do not have to get too little or pay more compared to the house’s worth. For other people, a home appraisal is beneficial when taking a mortgage or appealing for a tax assessment.
Whether you want to sell your house or take a loan, there are a lot of things you need to know about home appraisals. How can you find appraised value of home? Is it the same as market value? This article will answer these questions and many more.
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What Does Appraised Value Mean?
An appraised value is an objective value of a home. It is determined by a professional or licensed appraiser through property inspection and comparable properties. Home appraisals are mostly used by mortgage lenders who want to know the value of your home.
If the value of your home is lower than the loan requested, then you will not receive it. The loan has to match the appraised value. Other reasons for ordering appraisals include refinancing a mortgage, buying or selling a house, an equity loan application, or a tax assessment appeal.
How to Find the Appraised Value of a Home
You can find an unbiased value of your home in several ways:
A) An Online Valuation Tool
One easy way to know your appraised home value is by using an online home value calculator. You use public record information and other details of your home to calculate how much it is worth. Even if it is not an accurate method, it can give you an idea of where your home ranges.
An After Repair Value(ARV) calculator is one calculation tool that can help you evaluate comparable properties in your area. You only need to fill in information such as the address, and you can get an estimate of the appraised value. Luckily, it is free and easy to use.
B) Real Estate Professionals
Real estate agents can also tell you the appraised value of your home. A private industry database helps them access recent information on any home. You can use a realtor’s opinion to ensure you get a better analysis of your home.
A real estate agent will use CMA(Comparative Market Analysis) to measure the value of your home. They will get details on comps, also called comparable homes, in your suburbs. Knowing what homes that look like yours are worth can also give you a fair estimate. A realtor uses size, location, style, view, recent sales price, and home type to determine CMA.
With this option, it is crucial to respect the realtor’s time investment. Remember, if you are using them to know your home’s appraised value, they expect you to use them as your realtor.
C) Licensed Appraiser
If you want the best appraisal value, get yourself a professional. With a licensed appraiser, you have the guarantee of getting accurate values. Mortgage lenders require an appraisal from a professional so that loan transactions are completed. However, if you are selling your home, you do not need a professional appraisal value. Professional appraisers determine your home’s value depending on a lot of things. They research the value of your home through home visits and reviews on other similar homes.
Additionally, they use a report as a guide and the house’s sales history to estimate the cost to build your home. You should not confuse a home inspection with the appraised value. A home inspection will only look at the structural soundness of your home for completion of a sale.
When choosing an appraiser, ensure that they have certificates and have experience in appraising your type of home. As for the price, it depends on two main factors; your residential area and the size of your home.
How Can I Appraise My Home Myself?
The cost of getting a licensed appraiser to give an estimate of your home is a lot. People then result in getting values from online calculators. Even if they give you an idea of your home’s worth, they do not give you exact values. Luckily, you can be your appraiser. Here’s how to do it in three steps;
1) Look For Close By Comps
Comps are the first step in getting your appraised home values. Look for houses that have a similar size, location, bedrooms, bathrooms, acreage to yours. If possible, look for a similarly structured house that was on sale less than two months ago. For the location, the closer the house is, the better. You can also look at different realtor sites to see which houses are similar to yours that are still on the market. Look at the properties and the price.
2) Workout The Price Per Square Foot
Once you find your estimated selling price, go ahead and divide this by the square footage. It will give you a result of the cost per square foot. Ensure that you have prices for at least three properties.
3) Determine Your Range
Add up the cost per square foot of all the homes you looked at and divide by the number of homes to get the average cost-per-square-foot. Take this number and multiply it by your home’s square footage.
After you get the final value, you can add and subtract 10% of the value too workout a reasonably accurate price range for the house.
What Is Appraised Value Based On?
The largest component of an appraised value comes from comparable property prices. Other factors that come to play in getting the appraisal value include:
- Interior and exterior condition
- The number of rooms in the house. The value goes up with the number of bathrooms and bedrooms.
- Interior design and functionality
Electrical, heating, and plumbing.
Kitchen, windows, bath, and roof improvements.
- Age and condition of the house
- Pools. Hot tub and other exterior features including decks, detached garages, and porches.
Are Market Value And Appraised Value The Same?
Market value is what people are willing to pay for a house. It is based on what a home is worth depending on recent market conditions.
The appraised value is an objective value of a home given by a third party. It is mostly used by mortgage lenders to ensure the requested money is equal to the home’s worth.
When it comes to mortgages, you have to get a certified home appraisal. However, you can get the appraised value of your home by yourself while selling the home. It’s an essential aspect of real estate as it helps avoid getting low or paying high prices for a home.