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An appraisal is a crucial element in many real estate transactions, making it important to grasp the process involved. Whether you're in the market for a new home or considering selling your property, having a good understanding of how real estate appraisals influence the transaction will empower you to proceed with confidence.

Appraisal FAQs Answered

What is an appraisal?

A real estate appraisal is a professional assessment of the market value of a property. Appraisals are conducted by licensed appraisers and involve an in-depth analysis of various factors that influence the property's value. The appraiser is an independent party that can provide an objective estimation of the worth of the property.

Is an appraisal the same as an inspection?

An appraisal and an inspection are two different parts of the home-buying process. An appraisal focuses on determining the property's market value, while a home inspection assesses the condition of the property's structure and systems. Both are valuable processes in a real estate transaction, serving different purposes.

Why are real estate appraisals necessary?

Appraisals are often required in real estate transactions to determine the fair market value of a property. Lenders use appraisals to assess the property's value before approving a mortgage, and buyers and sellers may also seek appraisals for negotiation purposes.

Mike Kotler, Expert in Hoboken Relocation says, "The appraisal is considered the authority on the worth of the property. This is helpful for lenders to assess the level of risk they are taking on, making sure the borrower is not paying more for the home than it is worth. Even if a buyer is going to pay cash, they will likely want to see that an appraisal confirms the value of the property is comparable to the purchase price to avoid being upside down on the investment."

What influences the appraised value of a property?

Several factors affect a property's value, including its location, size, condition, age, features, recent sales of comparable properties (comps), and current market conditions. Because there is an extensive list of dynamic factors that make up the price, licensed real estate appraisers are essential.

Colum Malcolmson, New Braunfels Realtor says, "Appraisers use a combination of methods to determine the value of the property, including the sales comparison approach (comparing the property to recently sold similar properties), the cost approach (estimating the cost to replace the property), and the income approach (evaluating potential income for investment properties)."

Can I choose my appraiser?

In many real estate transactions, lenders select and hire the appraiser. This helps ensure that the buyer is not trying to manipulate the result in any way. However, homeowners or buyers may have the option to request a different appraiser if they have concerns about objectivity or expertise. We can help you navigate this if you have a concern.

How long is the real estate appraisal valid?

The validity period of an appraisal varies but is typically around six months. If the sale doesn't close within that timeframe, a new or updated appraisal may be necessary to reflect current market conditions. In most cases, the deal with either close or fall through before the appraisal is void.

Can I challenge the results of an appraisal?

If you believe there are errors or discrepancies in the appraisal report, you may have the option to challenge the results. This typically involves providing additional information or documentation to support your case, but in some scenarios, it is helpful and is the difference between being able to buy a home or not.