A home appraisal refers to an unbiased and professional opinion of the value of one’s home. The valuation is usually done either for purchasing and selling of a house and for refinancing purposes.
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Appraisals are done to determine the home’s contract price in a purchase-and-sale transaction, based on various factors like the condition, comparable sales, available amenities, and foundation quality. Appraisers will look at both the exterior and interior of the home, thoroughly inspecting the minute details of the living space, from the layout and flooring to plumbing and parking spaces.
For refinance, appraisals are needed to assure the lending institution that it is providing the correct amount of money based on the home’s worth. This is important as the house will serve as mortgage collateral, just in case things go awry. Banks are therefore protected via appraisals from lending more than it would need to recoup the money.
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It is usually the lender that orders the appraisal, hiring a licensed or certified appraising firm that is familiar with the area. Appraisers are expected to be impartial for the valuation process, with no vested interests or relationship with the homeowner, as directed by law. The price of the house is determined based on his or her unbiased observations, comparative assessments, and existing market trends.
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