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∑ Should I have an appraisal done before purchasing or selling a home?
An appraisal will provide you with an objective opinion and help you to determine the fair market value on the home you are going to purchase or sell. The fee for a high quality appraisal report will be small compared to what may be the largest investment of your life. Lenders will require an appraisal, by a State Licensed or State Certified Appraiser, to determine the value of the property that is being sold. You can relieve some of the stress of selling or buying a home by having an appraisal done before the sale. As a seller, an appraisal may assist you in the marketing of your home to prospective buyers.
∑ What is the purpose and function of an appraisal?
The sole purpose of an appraisal is to form an opinion of the market value of the property. For mortgage loan purposes, the function of the appraisal is to assist your lender in evaluating the subject property as collateral for your mortgage loan. An appraisal can also be used for estate purposes, tax reasons or simply to determine the value of your home.
∑ What is the definition of market value?
Market value is the most probably price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.
∑ How does the appraiser arrive at their opinion of market value?
The appraisal is based on information gathered by the appraiser from public records, inter-office data, inspection of the subject property and neighborhood, and selection of comparables within the subjectís market area. The appraiser is required to select a minimum of three recent closed sales similar to the subject in regards to style, location, square footage and physical amenities.
The appraiser then makes a dollar adjustment either negatively or positively, when appropriate, to reflect the
market reaction to those items of significant variation. Be advised that the dollar cost of an individual
amenity or additional feature does not always reflect the contributing value of that item.