3 Frighteningly Common Real Estate Appraisal Myths
A real estate appraisal is an important part of just about every sale and purchase of a home, especially if the buyer needs a loan. A home loan lender usually requires a residential property appraisal before they approve any financing.
Whether you're the buyer or the seller, you have limited control over the appraisal. However, it still pays to be informed about the process so you're not feeling left in the dark. Many people end up learning the truth about common real appraisals myths — including the three below — the hard way.
Myth: An Inspection and Appraisal Are the Same Thing
A real estate appraisal and home inspection are two distinctly different things. An appraiser will view a home, research the area for comparable property prices, and provide an estimate of the home's true market value.
The inspector will look for serious problems with the home during an examination. While an appraiser does look for some obvious flaws which could lower a home's value, the inspector will go much deeper.
Myth: More Amenities Means a Higher Appraisal
A homeowner adding upgrades to a home that cost $100,000 doesn't mean the appraised price will rise by $100,000. The real estate appraiser will stick to aspects they can quantify and measure, such as room count and square footage, to estimate the home's value.
While some upgrades, such as an updated kitchen, can add value, others are too specific to the homeowner's needs or wants and may not have the same impact. A pool, for instance, can lower a home's value because some buyers will not want to deal with the work involved in owning one.
Myth: The Appraisal Will Match the Buyer's Offer
A buyer or seller cannot hire an appraiser and tell them the value they believe the home to have. This would undermine the independence real estate appraisers are supposed to have under current real estate regulations. What the seller is willing to accept and the buyer is willing to pay have no impact on the final appraisal figure.
Overall, the real estate appraiser will give their honest, educated opinion on the property's market value. In many cases, the property appraiser is hired by the lender providing the loan to the buyer to confirm the house is worth the requested loan amount.
While a real estate appraisal doesn't always go how a buyer or seller expects, it is a necessary part of the real estate sale process. Without appraisals, sellers and buyers would not know the true value of the home being sold before the sale was final.
For more information, contact a real estate appraiser in your area.