Real estate valuation might appear complicated and arbitrary to some consumers. They might wonder why an “exactly the same” house next door is listed at a higher price or why new marble counter tops didn’t add more with their home’s value. We have compiled four myths that clients might express concerning the appraisals as well as the facts we would like to share with you.
Myth-busting details about appraisals
Myth 1: ‘I don’t need an appraisal because I’ve had a home inspection.’
Fact: A major difference is that inspections are not required, but appraisals often are required when the consumer is getting financing.
Even though there might be some similarities, a property inspection determines the condition of the house and a appraisal indicates the value.
As outlined by an Appraisal Institute handout, an appraisal is actually a credible and reliable opinion of value derived from factors which include research into appropriate market areas, the assembly and analysis of information pertinent to a property and the knowledge, experience and professional judgment of the appraiser.
Myth 2: ‘All appraisers are exactly the same.’
Fact: At the very least, all states require appraisers to be state licensed or certified to produce appraisals to federally regulated lenders.
But, as in other professions, appraisers’ experience, expertise and certifications might vary.
Real estate agents can suggest that clients ask their lenders to hire an appraiser proficient in valuing similar properties and one who has gone beyond meeting minimal professional requirements.
Myth 3: ‘Every improvement has added to my home’s value.’
Fact: Home improvement projects are not necessarily investments in which a homeowner should be expecting a dollar-for-dollar return.
Reported by Remodeling magazine’s most up-to-date Cost vs. Value Report, the projects with the highest expected return on investment are attic insulation, manufactured stone veneer and garage door replacement.
Other projects with potential payoffs, according to the report, are entry door replacement (steel and fiberglass) and minor kitchen remodels.
Projects that take a home significantly beyond community norms tend to be not really worth the cost if the owner sells the property. If the improvements don’t match what’s standard in a community, they’ll be considered excessive.
Myth 4: ‘The appraisal is under the list price of my house, and there’s nothing I am able to do about it.’
Fact: Appraisers strive to generate credible and reliable opinions of value, but mistakes can occur.
Homeowners can review a copy of the appraisal report, which lenders should provide to them at no cost no later than three days prior to the loan’s closing.
We always urge our clients or their lenders to review it carefully and confirm the accuracy of information on square footage, number of bedrooms and baths and similar features.
If the homeowner finds errors, they should contact the lending company and potentially request another appraisal.
Nick & Cindy Davis assist our clients comprehend the valuation process by telling them that appraisals are intended not to confirm a home’s sales price, but to assist lenders in lending decisions.
Appraisers are independent third-party experts and highly trained and experienced valuation professionals.
By alleviating concern with the valuation process, we strive to help make our clients real estate transactions more productive and efficient.
So if you are ready to sell your current home or purchase your new home, Nick & Cindy Davis are here to assist you. We are always just a click here or call to 813-300-7116 away