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Common Misconceptions About Residential Appraisals

by Jon Smith, CRB, CRS, GRI

You have found the perfect home and are ready to buy, and you lender needs a real estate appraisal. If this is your first time buying you may not understand exactly what that is. A real estate appraisal is a detailed report that is created by a licensed appraiser in your state and establishes the market value of a residential property. A number of considerations go into an official appraisal, and it forms the basis of the bank’s determination of the loan value. While appraisals do consider market comparisons, the actual appraisal value comes from much more than a market analysis.

Here are the components of a residential appraisal:

  • Property details
  • Comparisons  to at least three similar properties
  • Evaluation of the market conditions in the area
  • Environmental conditions that could decrease the property’s value
  • Structural issues that could decrease the property’s value
  • Estimate of time on the market
  • Status of the home site – new development, established neighborhood, acreage

Common misconceptions

  1. Appraisals aren’t the same as home inspections
  2. Appraisals are owned by the lender and not the buyer
  3. Assessed values don’t necessarily match market value
  4. Realtors do not provide appraisals
  5. Consumers do have the right to question appraisal facts and contest them

Understanding the neighborhood and ‘comps’ are an important part of your buying experience, but you are also bound to the official appraisal given to the lender. Work with your realtor, lender AND appraiser to make sure you understand all the details in the appraisal report of your new home.

 

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Determining the Value of Your Home

by Jon Smith, CRB, CRS, GRI

In today's real estate market every homeowner is asking the same question - What is the value of my home?  Jon Smith of Iowa Realty says that this is probably the number 1 question a homeowner will ask.  Most homeowners are not sure how to determine the value is this unsettling real estate market.

Being informed and know what your home will sell for today will should be the first step in preparing to sell your home.  A home is worth what someone will pay for it. Everything else is an estimate of value. To determine a property's value, most people turn to either an appraisal or a comparative market analysis.

An appraisal is a certified appraiser's estimate amenities, energy efficiency, the quality of the of the value of a home at a given point in time. To make their determination, appraisers consider square footage, construction quality, design, floor plan, neighborhood and availability of transportation, shopping and schools. Appraisers also take lot size, topography, view and landscaping into account.

The list price is the price tag put on a house in a real estate listing; it usually is only an estimate of what the seller would like to get for the property. The sales price is the amount a property actually sells for. It may be the same as the listing price, or higher or lower, depending on how accurately the property was originally priced and on market conditions.

A seller may need to adjust the listing price if there have been no offers within the first few months of the property's listing period.

The appraisal value is a certified appraiser's estimate of the worth of a property, and is based on comparable sales, the condition of the property and numerous other factors. Lenders require appraisals as part of the loan application process; fees range from $200 to $300. Appraisers use several factors when estimating value including historical records, property performance, condition of the home and indices that forecast future value.

Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker. Because brokers and agents are not state-certified appraisers, they may not perform appraisals in most states. Instead, they estimate the value of a property using a CMA.

You can do your own cost comparison by looking up recent sales of comparable properties in public records. These records are available at local recorder's or assessor's offices, through private companies or on the Internet. Neither of these services produce official appraisals. They also don't factor in market nuances or other issues a certified appraiser or real estate professional might in assessing the value of your home.

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Contact Information

Photo of Jon Smith, CRB, CRS, SRES, SFR Real Estate
Jon Smith, CRB, CRS, SRES, SFR
Iowa Realty
3521 Beaver Ave.
Des Moines IA 50310
515-240-2692
Fax: 515-453-6404
 

 

 

Licensed in the State of Iowa