5 common myths about home appraisals
TRANSCRIPT
5 COMMON MYTHS
ABOUT HOME APPRAISALS
Liz KroftRealtor®, GREEN, ABR
Mainstream Real Estate Group
WHAT IS A HOME APPRAISAL?
APPRAISALnoun [uh… - prey – zuhl]
An appraisal is an opinion of value
A licensed appraiser comes to the property and inspects the home.
The appraiser will research similar homes in the area and compare recent sales to determine a fair market value.
The appraiser will then give a final appraisal report with all the data and research to issue a final “opinion of value.”
MYTH #1:An appraiser is hired by the borrower.
[ fact ] Even though the borrower may
be responsible for the cost of an
appraisal, appraisers are hired
by lenders, anonymously.
Appraisers provide an analysis of
the collateral, so that lenders
understand the value of a
property when making a loan
decision.
MYTH #2:Money put into a home translates
dollar-for-dollar into a higher appraisal.
[ fact ]
The cost of a home improvement *may* add value,
but the value is based on what
the market is willing to pay and
may not correlate to the cost.
Not all renovations
positively impact
property values.
[ fact ]
Appraisers don’t set the value of a home
nor do they confirm a home’s sale price.
Their role is to produce a
credible opinion of value
which reflects the current market.
MYTH #4:Appraisersand homeinspectorsperformthe samefunction.
[ fact ]
Both provide crucial info, but
their roles are very different.
An appraiser provides an objective,
unbiased analysis so the lender can better
understand the value of a property.
An inspector performs an objective
visual examination of the physical structure and
systems of a house to ensure the structural integrity
of the property.
MYTH #5:The most important factor of an appraisal
is the square footage of a home.
[ fact ] An appraisal is based on a
number of considerations,
including a house’s size, location,
condition, age, quality, and more.
Such characteristics are analyzed
in relation to recent sales of
comparable properties.
It is important to remember that home appraisals are not quite like comparing apples to oranges. They are somewhat subjective, and not an exact science.
Your Realtor® should provide the appraiser with the appropriate comparables and should have educated you on and have a plan in the event the appraisal comes back below the purchase price.
LIZ KROFT
REALTOR®, GREEN, ABRSanta Cruz & Campbell, California
d: 408.502.7011 | c: [email protected] www.lizkroft.com
calbre 01937727
If you have any questions about the appraisal process I would love to help!