Real Estate Appraisal

A real estate appraisal is something that most of us have heard of but not many of us have dealt with until we have actually purchased a piece of land or a home of some type. The whole process can be quite confusing, especially if you aren’t quite sure what the purpose of a real estate appraisal is. To be clear, a real estate appraisal seeks to determine the value of the land or property in question. A real estate appraisal can be done no matter how large or small the real estate is. An appraisal can also be done regardless of the age, the architecture, lack of architecture, or location. Where or what the real estate is will not determine if an appraisal can be done, instead it will determine the value.

Of course, you may not want to approach the appraisal of your densely wooded acreage the same way you approach the real estate appraisal for your home. You will probably need the help of a different individual, or at least a very experienced individual for both. You will want to be sure that you work with people that are familiar with the type of real estate that you need appraised as well as knowledge of what surrounding real estate or comparable real estate is valued at. It all sounds very complicated, but if you approach the process simply and you understand why you should have an appraisal done you will find that it is much less confusing.

Getting a real estate appraisal before you buy a property simply makes sense. When an appraisal is done you will be given an exact dollar amount of what the land, including any structures or improvements is worth. What does this mean to you? Well, if the current owner is trying to sell the real estate to you for $200,000 and you pay him that without having an appraisal done you are taking him at his word that the land and all structures on it are valued at that amount or more. The problem is that if the owner did not have an appraisal done he may not be aware that his land is worth much less than he thinks. Other owners will actually try to sell their real estate for more than it is worth because they want to get their investments out of the house or land. An appraisal will let you know if the sales price is fair so that you don’t pay too much for land or a home that is worth much less. Thus, in the real estate investment business, a real estate appraisal plays a vital role for the serious investor.

So, you don’t care how much the land is actually worth because you really love the piece of real estate you are looking at. That is good for right now, but in the future your carelessness may not serve you quite as well. You want an appraisal now because you need to know if the price you are buying the land for now will allow you to at least break even if you need or want to sell in the future. If you buy the real estate for $200,000 and it is only worth $75,000 you may never be able to get your $200,000 back depending on where you live. As you can see, you need to approach your real estate ventures like business to secure your future, as you never know when you may want or need to sell, no matter what your plans are right now.

As you can see now, a real estate appraisal is simply good business but it will also benefit you in many ways. First, it will give you the dollar amount that the land you want to buy, are in the process of buying, or that you currently own is worth. What you do with this information can benefit you in many ways. First, an accurate real estate appraisal will allow you to ensure that you get the best deal on a house if you are buying but it will also allow you to sell your house for its full value. Instead of under valuing your home you can be sure to get every dollar out of it possible. This is a huge benefit because it can literally mean thousands of dollars in your pocket. In contrast, a real estate appraisal will help the investor determine precisely how much a property can be sold for reasonably.

In addition to knowing the value of your home and being able to buy and sell for the appropriate prices, you will also find that you will not be able to get financial assistance without it. All mortgage lenders require a real estate appraisal to be sure that they are not lending too much for any given property. As stated above, it simply is not good business to pay $200,000 for a property that is worth just $75,000. A lender does not want to lend you more than the home is worth, because then you are both out. So, if you are relying on a mortgage to help you buy a home, you will need that appraisal.

Another added benefit is insurance. Most insurance companies will not insure your home just because you say that you paid $200,000 for it because Mr. John Doe said it was worth that. Instead, they want an appraised amount that the house is worth. This is important to an insurer because if something happens to your home they will need to replace it and they provide coverage based on the homes appraisal. An appraisal will benefit you in this area because while you might think your home is only worth $75,000 it could be worth $200,000 and you don’t have enough coverage without that appraisal.

The cost of an appraisal really varies from market to market and may also depend on the type of real estate that you are having appraised. If you are simply buying a home and you are dealing with a loan officer they may have an appraiser that will have it done for as little as $50. If you use your own private service you could pay that much per hour, or the appraiser could charge by the square footage, and others simply have flat fees. If you choose a private appraiser, be sure that he or she is certified by your state and be sure that their fees are competitive. If their rates seem a bit high and you can see no reason for it, ask why the rates are substantially higher, if no reason can be given then you might as well go with one of the others that is more affordable but just as qualified.

If you are having land appraised you may find that it is a bit more expensive, especially if you are dealing with a lot of acreage. If there are structures or improvements on or within the acreage you may find that the price goes up even more. If you can, work with a loan officer if you are in the process of buying or selling, because they can almost always recommend someone that is very affordable. If you are having an appraisal done after you have completed work on your acreage, such as clearing or building, shop around for the best appraiser in your area that is experienced. Remember that price doesn’t always promise experience, so ask for references and don’t be ashamed to ask about experience.

We’ve already covered the benefits and the cost of why you should have a real estate appraisal done, but by now you are probably wondering who exactly you should hire to do the real estate appraisal. The professionals that perform a real estate appraisal are called appraisers and they are usually certified or licensed by the state. If an appraiser is not licensed by the state: his or her statement pertaining to the real estate appraisal may not be accepted by realtors or lenders as a reasonable statement. This means that if you are selling you may not be able to get a realtor to take you seriously as well as the lenders of potential buyers. Since financing is critical in the real estate business, it is important to work with a real estate appraiser that is fully knowledge in all aspects of the appraisal process. Also, if you have a real estate appraisal done on a home or land that you currently own and want to renovate and you need a loan to do so, you want a valid real estate appraisal to show what equity you may or may not have in the house and to show that there is room for improvement based on the market.

You can hire an appraiser straight out of the phone book, if you want. If you are working with a realtor, banker, or lender they will probably have someone that they work with all the time and can get the job done much more quickly than a private appraiser, and probably more affordably, too. If you aren’t working with any of these professionals you may want to check out your state or county appraiser website or registries. These are usually listings of appraisers that are available for different types of work, listed by their specialties. Be sure to choose someone that is familiar with your type of real estate so that you are sure you get the best real estate appraisal possible.

If you are in the process of buying or selling a house and you are required to have a real estate appraisal done you may wonder how long it will take to get it all done. Usually an appraiser can get the real estate appraisal done in a matter of an hour. What this entails is usually a visit to the home to look at the land, the structure, any improvements, and the surrounding neighborhood. The appraiser will usually then pull up county documents that will give them an idea of the value of the houses around the house that you are buying or selling, since the neighboring houses do affect the value of your home. All of this can be done in very little time for the experienced appraiser.

Generally you will find that a real estate appraisal report will be returned to you, your loan officer, your realtor, or your lender within a week. If you get with an appraiser that you know and trust it can often be even less time, it’s usually generating the report and getting it to all the necessary people that take the most amount of time. Instead of worrying about how long the real estate appraisal will take, worry about getting a qualified professional that will complete the process in the most efficient amount of time possible. Buying and selling a home takes time, and so much of it is hurrying and then waiting, but if you just sit back and relax and allow things to take place you will find that you are a lot less stressed.

Many people assume that when they have a real estate appraisal that the dollar amount that they are given is for either the structure or the land, when the fact is that the total amount is for both. First, an appraiser looks at the value of the land. Many people don’t realize it, but land costs money. You cannot, in most places, simply decide you want to put a house somewhere and construct the house without paying a premium for the land. Because of this, when you buy a home, you are not only paying for the structure but also for the land that it is built upon. In fact, in most cases, the land is more valuable than the house that sits on it! So, when a real estate appraisal is done the appraiser will look at both. In most cases the structure is simply looked at as an improvement of the land. In some cases, as with pools and such, value can actually be taken away from the land, though it depends on the market and the type of land that is being dealt with.

When you look at a real estate appraisal report you will find that there are three numbers. The first number will be the value of the land; this would be what you could sell the land for if you knocked the home down and sold it. The next number will be the approximate value of the structure and the third number would be the combination of the two, or the total value of the home, or what you could expect to sell the home for. The total value on the real estate appraisal is the most important figure, allowing the real estate investor to realize the property’s net value.

If you are buying a home you will probably be given a choice of whether or not you want to receive the report of appraisal. You should always opt to get it, just so you have it for your records, even though it may not be valid for more than a year or so. It’s good to have this in your records should you attempt to sell the house in the future and have someone claim that the property was never worth that amount. If this happens, you can pull out the report and show that you had a certified appraiser come to the property and value it at that amount. Remember, just because the dollar amount is put on a piece of paper doesn’t mean that your house won’t depreciate in the future. An appraisal is a statement of the value of your home or property right now and gives no guarantees of how long that will remain true based on improvements, upkeep, natural disaster and weather, and natural aging of the house.

As you can see, appraisals are very important when it comes to buying and selling a home. If you have never purchased a home before you might very well be overwhelmed, but remember that you want to have the appraisal done because it is protecting you. An appraisal can tell you whether or not the sales price on a home is fair or not. You don’t want to pay too much for a home if you are a buyer and if you are a seller you don’t want to sell your home for too little. A real estate appraisal can protect both the buyer and the seller by providing essential information that will help both make more informed, business smart real estate decisions. An appraisal does not take very long at all, but its benefits can be long lasting and are well worth the time and money spent to make the appraisal happen.

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