If you’re contemplating selling your property or just inquisitive about its worth, a real estate appraisal is an excellent tool to determine the potential value. This comprehensive guide will delve into everything you need to know about real estate appraisal.
Understanding Real Estate Appraisal
A real estate appraisal, also referred to as a property appraisal, is a process where a real estate professional estimates the market value of your property. The procedure involves assessing various aspects of your property and comparing it with similar properties in your local area that have sold recently, usually within the past 90 days.
The appraisal helps you answer the question, “how much is my home worth?” It’s crucial to note that an appraisal is just an estimate, and it doesn’t hold any legal standing. Most real estate firms offer this as a complimentary service.
Key Factors Considered in Real Estate Appraisal
When conducting a real estate appraisal, professionals consider several factors to estimate your property’s potential selling price in the current market. Let’s delve into these considerations:
1. Property Size
The size of your property plays a significant role in its appraisal. This includes the size of the land, the structure, outdoor areas, key features, and critical rooms in the home like the living area and main bedroom.
2. Number of Rooms
The number of bedrooms and bathrooms in your property can significantly impact its value. The agent will consider their size and whether they include built-in wardrobes, an ensuite, or stellar views.
3. Property Condition and Structure
The overall condition and structure of your property affect its potential market value. A property in excellent condition tends to fetch a higher price. Potential buyers often request a building report, and if the property needs structural work, they’ll likely negotiate for a lower price.
4. Features and Fixtures
The agent will also assess fixtures and fittings and whether they’re included in the selling price. These may include decorative light fixtures, blinds, curtains, and other features. The condition of these features is a crucial factor in the appraisal process.
5. Location and Local Amenities
The location of your property and its proximity to essential amenities such as schools, shopping centers, and public transport can significantly influence its value. The agent will also consider factors like street appeal, local council restrictions, and zoning.
6. Recent Sales Data and Market Conditions
Recent sales data from similar properties in your local area and current market conditions also play a significant role in the appraisal process. The agent will analyze this data to determine your property’s potential market value.
7. Economic Environment
The current economic environment, including interest rates, can impact the market value of your property. For instance, if the market is experiencing a downturn, it might lower the estimated value of your property.
The Purpose of a Real Estate Appraisal
A real estate appraisal is essential for various reasons. It provides a rough estimate of your property’s worth before selling it, allowing you to set a realistic selling price.
If you’re not sure whether it’s the right time to sell, an appraisal can give you insights into the current market conditions and your property’s potential value. It can also help homeowners identify ways to boost their home’s value.
Additionally, an appraisal can help you determine your property’s major selling points and how to highlight them when it hits the market so that your property sells for more money.
However, it’s crucial to remember that a property appraisal is just an estimate and has no legal standing. If you’re looking for a definitive value, you can opt for a professional property valuation, which incurs a fee.
Property Appraisal vs. Property Valuation
While a property appraisal involves a real estate agent estimating your property’s market value, a property valuation is a legally binding written report crafted by a professional valuer.
A professional valuer has formal qualifications and training in the field. They consider all features of the property, such as location, building structure and conditions, building faults, features of the home, and caveats or encumbrances on the property.
Property valuations are often required for property settlement, dispute resolution, obtaining a home loan for financing, and establishing the value of deceased estate settlements. Unlike property appraisals, property valuations are not free of charge.
Related article on How to get a property valuation?
Real Estate Appraisal vs. Bank Appraisal
Your bank or financial institution may conduct a property valuation as part of your home loan approval process. This is known as a bank appraisal.
A bank appraisal is beneficial to mortgage lenders, helping them determine how much money they should lend you and how much they can resell the property if you can’t make your mortgage repayments.
On the other hand, a real estate appraisal is a free service where a real estate agent gives you a rough estimate of your property’s market value, based on recent sales data and the property’s features.
The Process of Real Estate Appraisal
The real estate appraisal process involves several steps. Firstly, you’ll need to book a property appraisal with a local real estate agent. You can prepare for the home visit by gathering information about any renovations or improvements you’ve made to the property.
During their visit, the real estate agent will assess various aspects of your property and ask questions about its features and condition. This is also an opportunity for you to ask them questions about their local knowledge, marketing strategy, and commission.
Following the visit, the agent will provide a detailed report outlining the estimated property value. This report will include supporting documentation such as recent local sales data and broader market trends.
Choosing the Right Real Estate Agent for Your Property Appraisal
When selecting a real estate agent to conduct an appraisal, ensure that they have adequate experience and intimate knowledge of your suburb. They should understand the local real estate trends and be able to advise you on the best time to sell your property. An agent with experience in selling properties similar to yours would be an added advantage.
How Much Does a Real Estate Appraisal Cost?
Most real estate agents offer property appraisals as a free service. However, if you’re looking for a definitive value, you can opt for a professional property valuation, which incurs a fee.
A real estate appraisal is a crucial tool for homeowners considering selling their property. It provides a rough estimate of the potential market value of your property, helping you make informed decisions. However, it’s essential to remember that it’s just an estimate and does not hold any legal standing. For a definitive value, consider getting a professional property valuation.
Selling your house? Read this first!