Appraisal

Crunch the Numbers

An appraisal is an estimate of how much something is worth, which can apply to real estate, a business, a piece of jewelry, and many other items.

They are usually used to determine a fair sales price, oftentimes called the “market value,” but they are also used for tax purposes, to refinance a home loan, during a divorce, or to evaluate a potential remodeling and renovation.

Home appraisal

The most common type of appraisal is a home appraisal, which is important so that you can get a loan. Most banks don’t lend money for a house without an appraisal.

 

Components of an Appraisal

 

How much do they cost?

Appraisals typically cost anywhere from $250 to $500.

The cost will vary based on property type, location, and square footage. Multiunit properties (such as apartments) and properties in rural areas will usually cost more to be appraised than a single-family residence in a densely populated area.


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What next?

Once an appraisal is ordered, most banks and lenders will order a review of it. The review will be conducted by a different appraiser. If the review comes in low, a bank may decline the loan and deny financing to the potential borrower. Even if the borrower has great credit, a flawed or overvalued property can kill the deal.

Fun facts:

  • Home appraisals don’t expire, but they are usually valid up to six months or until a lender calls for a new one.
  • The appraiser will note all permanent features to a home that could affect value, such as built-in appliances in the kitchen. Removable items are not included in the appraised value.

 

References

  1. http://www.investopedia.com/terms/a/appraisal.asp

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