How Important is a Real Estate Appraisal?

by Nancy Arlington - Date: 2007-04-30 - Word Count: 541 Share This!

A real estate appraisal is necessary any time you buy or sell any kind of real estate. The purpose for an appraisal is to find out the value of a piece of property. Banks and other lending institutions require an appraisal on real estate before they will lend the money to purchase the property.

Not only can a real estate appraisal give a fair and accurate value to the property, it can also, in some circumstances, determine the best use of the property, which can alter the value of the property dependant on the use of the land. For example, one time farming land may now be on the edge of prime commercial property, causing the value of the land to rise exponentially. An acre of farmland in a certain county may normally sell for $2000, however, if that same acre were rezoned as commercial, it may bring over $10,000.

An appraiser is similar to an inspector in that they are both looking for things that will bring value to the property, however an inspector is looking for things that must be corrected before the property can be sold. The appraiser is wanting to put a value on the property in its current condition. An appraiser may possibly be willing to volunteer the possible increase in value if certain problems were corrected or things were changed, but that is not their primary function.

A real estate appraisal is always based on the best use and highest value of the property. In other words, if your home is located in a commercial zone, the appraiser is likely going to determine the value based on commercial property, not residential. This is in the best interest of the seller of the property. There are instances in which a property may be zoned both residential and commercial and the value assessed in those instances will depend on the appraiser and the situation.

When you are in the market for a real estate appraisal, the following things will be considered by the appraiser in determining the value of the property. The appraiser looks for the assets, as well as the detriments, of the property. Gross living space, quality of construction, location, layout, the number of bedrooms and bathrooms, the lot size, condition of the home and land, central air conditioning, landscaping, number of fireplaces, decks, pool, fencing, recent renovations, amenities provided by the surrounding neighborhood, and crime statistics of the area are all considered by the real estate appraiser. Overall condition of the exterior and interior of the home are great factors in the valuation of the home as well. The appraiser usually only considers permanent structures with the valuation of the home. Portable outbuildings, above- ground pools, playhouses, etc are generally not included in the appraisal of the home.

If you are a seller, you should point out to the appraiser any amenities that are not easily discernable to the appraiser such as things that are covered now but easily uncovered. Things such as hardwood floors underneath wall-to-wall carpeting need to be addressed with the appraiser.

Selling a home without an appraisal is not a very smart thing to consider. Appraisals will almost assuredly work in your favor and enhance the value of the property that you are trying to sell.

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