A home inspection is for evaluating a home's condition. The inspector walks through and checks the structure from top to bottom, including the walls, ceilings, floors, windows and doors, as well as the mechanical and electrical systems, appliances and plumbing. After looking at everything, the inspector provides an objective report, including repair recommendations.
An appraisal is an assessment of home value. The appraiser considers the home's condition as part of the analysis of how much the property is worth, as well as other factors, such as the local housing market.
The appraiser doesn't make recommendations for repairs. As the mortgage borrower, you have a right to a free copy of the appraisal report at least three days before the loan closes. It's a good idea to read the report to check for accuracy.
Let the lender know if you find errors and think the estimated value is wrong. Any pertinent information you provide could lead the appraiser to reevaluate. You may also ask the lender for a second appraisal.
Keep in mind you'll have to pay for the appraisal if the request is granted. If the appraised value is less than expected on a home you want to buy, you may be able to use that information to negotiate a lower price with the seller. What is a home appraisal? Nerdy tip: Normally, an appraiser views the property inside and out.
But due to the coronavirus pandemic, lenders are not requiring appraisers to step inside homes for many purchase and refinance mortgages. Instead, appraisers may rely on market research and other data, photos and exterior views. How much does a home appraisal cost? What affects the home appraisal cost?
Mortgage type. Property size and complexity. Who pays for a home appraisal? Home appraisal process. What do home appraisers look for? You can simply replace an outdated sink, old tiles or dated light fixtures to give these spaces a refresh. No single home valuation method is guaranteed to be percent accurate.
Additionally or alternatively, you could pay for a professional appraisal. Ultimately, however, the most reliable home value estimates come from professionals who take the time to carefully assess your property based on a variety of factors. How We Make Money. Erik J. Written by. Edited By Suzanne De Vita. Edited by. Suzanne De Vita. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters.
Reviewed By Robert R. Reviewed by. Robert R. Johnson, Ph. Share this page. Key Principles We value your trust. How much is my house worth? When getting a home value estimate, consider the three main types of valuation: Fair market value : Fair market value encompasses what your home looks like to prospective buyers compared to other homes in the area.
If you work with a real estate agent to help you sell your home, this is where your agent will start: by looking at comps to gauge what buyers have been willing to pay for a property comparable to yours. Appraised value: While the appraised value of your home factors in comps, it differs from fair market value. The appraised value is what mortgage lenders look at when a borrower buys a home or refinances their mortgage.
Assessed value: The assessed value is the assigned dollar value of your home used by local county tax assessors to determine property taxes. While an online home value estimator can be helpful in getting a sense of what your house is worth, the number you see is only a starting point, not the final word.
Local real estate agents may provide a CMA for little or no cost, but be aware: They may do so with hopes of being hired as your selling agent. Then it uses this information to estimate how values fluctuate in a given market. Sounds great, right? Among other things, appraisers evaluate:. Market: The region, city and neighborhood in which a home is located. Property: Characteristics of the house, including improvements and the land it sits on.
Comparable properties: Sales, listings, vacancies, cost, depreciation and other factors for similar houses in the same market. This information is combined to create a final opinion of value for the home and delivered in an official report. On its face, this approach seems simplest. Pulling comps is one way to determine market value without paying an appraiser, but use good judgment.
Think about which properties would interest a buyer if yours weren't available. Look for similar size, location, condition and upgrades. Browse a site where MLS listings are displayed, to find the recent sale prices of comparable houses in your neighborhood. How much you add or subtract depends on conditions in your market, which can vary widely.
After adjusting values, look at your highest and lowest comps. A rough estimate of your home value is somewhere in the middle.
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