When buying or selling a home, you’ll often hear of real estate appraisers. However, people rarely understand what they do – it’s almost a mythical process playing an essential role in home transactions right across the country. Today, we’re going to clear up the mystery once and for all. What does a real estate appraiser do? Stay tuned to learn!
The Goal of an Appraisal
Ultimately, there is one goal with an appraisal – to ascertain an educated prediction or opinion of a property’s value. With this in mind, some people will call the process a property valuation rather than an appraisal (but there’s an important distinction which is addressed in the next section). Therefore, a real estate appraiser is trained and educated to provide this opinion after considering all the pertinent factors regarding the home.
Buyers are interested in the appraisal because it determines how much they need to borrow from the bank; in some cases, it could even alter pre-agreed conditions with the financing company. Sellers are interested in the appraisal because they need to know the value of their property and how attractive it is to buyers.
At this point, we should note that there’s an important difference between an appraised value and an assessed value. With the latter, it’s generated by the taxing authority to determine how much the homeowner should pay for property taxes. Quite often, the assessed value of the home is quite different from the appraised value for this reason. The appraised property value estimate is generated by an appraiser to determine the actual price of the home. With this, mortgage companies aren’t lending a higher amount than the property’s value.
Ultimately, appraisers are looking for a fair market value with an appraisal, an acceptable amount for somebody to pay for the property. A real estate appraiser may also appraise a property if the homeowner wants to dispute property taxes.
Appraisal vs Valuation
Real estate appraisals are a loose guide to pricing for all parties involved in a potential transaction. Although most appraisals are requested by buyers, some are carried out independently without leaning one way or the other. In the majority of states across Australia, these professionals are qualified and normally provide a legitimate report upon completion.
How does the appraisal process work? Well, the professionals keep several factors in mind when ascertaining the value of a property. This includes the location, similar transactions in the area, and the overall condition of the property. They’ll consider the number of bedrooms, the size of the property, the fittings and fixtures, potential improvements, restrictions with planning, and more. However, it must be remembered at all times that an appraisal is an opinion.
With a property valuation, this is a more formal approach to valuing a property. Rather than risking a partial opinion, this is performed by a completely independent individual. Also, the valuation digs deeper into the true value of the property and considers an abundance of factors before coming to a final valuation. This includes:
- Structural integrity and strength
- Access for vehicles and pedestrians
- Fittings and other presentation features
- Local council zoning
- Additional features
When buying or selling a home, you don’t need to get an appraisal. This being said, it is a good idea to get some guidance on pricing rather than guessing. Especially for those who have invested in improvements, you want to know whether this has affected the property’s value. An appraisal often allows for stronger financial decisions both now and in the future!