Finding the Best Value for Your Home

Why is getting an appraisal important?

An appraisal is important because it protects your investment. It's there to ensure that, as the buyer, you don't pay more than the home is actually worth. It's there to keep home values from rising beyond feasible limits.

It's also important for securing financing. In today's mortgage industry a bank will only give you a loan up to the fair market value of the home. Therefore, if an appraisal comes back lower than the purchase price, the lender may only issue you a loan for the appraised amount.

Fortunately, if this happens, you have the chance to renegotiate the deal (and keep from overpaying for the home). You'll have the chance to ask the seller to lower the purchase price to meet the new appraised value. If he or she won't accommodate your request, you'll have two options: you can either find additional financing to make up the difference or choose to back away from the deal.’m your About section. Click to edit and tell visitors how appraisals are done, what things you consider, and how you arrive at a property's final price.

What Does the Appraiser Do?
Recap: What is a home appraisal? It’s a formal evaluation of a property to determine its current market value. It usually takes place shortly after the buyer and seller have agreed on a price. The buyers then give their lender a copy of the purchase agreement, and the lender orders an appraisal to be completed.

But what does the appraiser actually do? How does he determine the current market value of the home? Here are some of the common practices and techniques used during an appraisal:

The appraiser will look at tax records to see the sale history of the home, if applicable.
He will look at the tax assessor’s current assessment of the property, which is the value assigned for tax purposes.
He will also look at comparable sales or comps, which are similar homes that have sold in the same area over the last few months.
The home appraiser will view the property inside and out, making note of any value-adding features. These are upgrades and improvements that might add value to the house. Outdoor living space (decks, patios) and kitchen upgrades are common examples.
He will also consider any unique features, such as a waterfront view or a larger lot — anything that might make the house worth more than the comps. So he’s looking at the comps, he’s looking at the tax records, and he’s examining the property itself.
He may also take pictures of the home during the appraisal process, so he can measure the quality and condition of the property. He will compare these to pictures of the comparable sales.
He will probably drive through the neighborhood to look at the other houses that have sold recently, so he can better compare them to the home being appraised.
Based on all of this research, the appraiser will come up with an appraisal amount for the home. This is the amount he thinks the property is worth in the current market. He will give this report to the buyer’s lender, who will then make a lending decision based on the information.