A property appraisal is an important element in supporting various types of decisions regarding the use and the general disposition of various types of real estate – such as a home. It also assists in establishing the rights of the property being evaluated. It is possible for a property appraisal to answer questions regarding the value of a parcel, the property’s usefulness, the suitability of the property, and its overall marketability. If you are a consumer, this guide is for you. Here, you will learn essential information regarding property appraisals.
What is a Property Appraisal?
A property appraisal is a process or an intentional act of developing and/or establishing an opinion regarding the value of a specific property. It involves the use of a valuation process. This is a systematic-based approach and procedure that a designated appraiser utilizes to answer questions and expound upon said property and its value.
Why is a Property Appraisal Done?
In most instances, a property appraisal is done when one is purchasing a new home, selling a home, or has a desire to refinance on an existing loan on a home.
A lender will use this appraisal in order to determine the value of the property being examined. Once the property appraisal is completed, certain factors may be determined.
These include the amount that is required for a down payment, whether or not a potential buyer will be approved for a loan on the property, and even the interest rate associated with a loan on the property.
How Does a Property Appraisal Work?
If you require the services of a lender for a property, you will need a property appraisal to determine its value. This is done because it will outline the amount of collateral that will go against the loan. It does not matter if you are making a new purchase, you want to refinance your current loan, or you are in the market for a home equity loan, an appraisal will be necessary.
Once the lender orders the appraisal, you will usually be required to pay for it as this is commonplace in the financing aspect.
Once done, the lender will establish the relation between the market value of the property and the loan that you have an interest in obtaining. You will be provided with a copy of the appraisal. You should then review the information on the appraisal.
If you find inaccuracies, you may request a reassessment. This may be requested of the individual that conducted the assessment and the lender that you want to work with.
If you experience further complications, you may file an official complaint with the Consumer Financial Protection Bureau. Additionally, the FDIC may be contacted at the following number: 877-275-3342.
How Can Appraisals Be Used?
There are many unique ways in which a property appraisal may be used. These include – but are not limited to – the following:
- To aid in the facilitation of the transfer of the ownership of the said property
- To assist sellers in determining how much a property may be sold for and to outline offering prices
- To create a unique basis for the merging, reorganization, or exchange of a property or multiple properties
- To help an underwriter determine the value associated with the security of a loan for a mortgage
- To assist an investor with a basis for purchasing a mortgage, a bond, or another type of a security
- To determine the market value of said property for the purpose and intent of any associated proceedings in regards to the domain
- To provide an estimate of the property value for the purpose and intent of clarifying contract disputes and/or as a part of a portfolio
- To get an estimate of the property’s market value due to the interests associated with a partnership
- To outline the damages that have occurred as a result of environmental-based contamination
- To give an outline of the estimate of the value of the property that has been assessed
- To specify the amount of taxes due if a property is considered to be a gift or an inheritance
- To determine value on a property that is part of an estate
- To outline the amount that should be charge for renting or leasing the property
- To gather information as to whether or not a construction program or a renovation program is needed and may complete projects on said property
- To make a revision to the book value of a property, to determine the issuance associated with a stock, and/or for the purpose and intent of satisfying the interests of corporate-based mergers
- If a forced-sale is going to occur or an auction is going to happen a property appraisal will outline the liquidation value of said property
- An appraisal may be done for the purpose and intent of client counseling on matters regarding investments – such as resources
- It may be done to advise interested parties of pending auctions – such as zoning boards and the local court
- Finally, a property appraisal may be performed to conduct an arbitration between any type of adversaries
What Influences the Value of Property Appraisals?
There are several influences that have a direct impact on how much value a property is appraised for. These include social influences, governmental influences, environmental factors, and economic influences. In addition to this, the nature of the real estate market, supply and demand, and other external factors play a role in developing a fair market value. Value is commonly viewed as follows:
- The cost it would take to replace or reproduce a property after deducting the amount for depreciation and the value of any land associated with the property.
- The value of properties that have been recently sold and are comparable to the said property.
- The value that outlines the net earning potential of the property.
How is Comparable Value Determined in Property Appraisals?
There are many elements that an appraiser takes into consideration when determining comparable value. These include the following:
- The Property Rights
- The Terms Associated with Financing
- The Conditions Surrounding the Sale
- Any Expenditures Associated with the Property
- The Market Conditions
- The Location of the Property
- The Characteristics Associated with the Property
- The Economic Components of the Property
- The Way the Property is Zoned and How it Will be Used
- Non-Realty-Based Components
How to Find a Property Appraiser
If you are in need of a property appraiser, you must be cautious in your selection. It is best to go online to the Appraisal Institute in order to select one. This is a specially-designed online directory that lists professionals throughout the United States and in other locations throughout the world. In addition, you may obtain information about special programs, resource publications, numerous services, and even benefits associated with the property appraisal process.
Contact Us Today
If you are in search of funding for a property, contact us today at Somerville Bank. We offer home loans, mortgages, home equity loans, refinancing, and more. In addition to this, we have a professional partnership with many different property appraisers in and around the area. We can truly take the challenge out of determining the value of your property for the purpose and intent of selling, buying, refinancing, or determining the value of the property as collateral. Give us a call, or visit one of the many branches that our bank has today. If you need a loan, we have the resources to assist you!