A home purchase is, without a doubt, the largest transaction most people will ever get into. It doesn’t matter if you are buying a family home, a vacation home or an investment, a home purchase is a huge undertaking – financially and legally speaking. As such, it involves multiple steps. One of these is the home appraisal.
A home appraisal may seem inconsequential. The truth, however, is that it is critical for a fair and successful transaction for both parties. Understanding the home appraisal process, and its importance, can help you make the right decision.
What is a home appraisal?
Basically, this is an unbiased assessment of the property’s value as conducted by a licensed appraiser. Of course, you can sometimes get an estimate of the home’s value. However, getting a professional assessment is crucial. Here are some of the factors the appraiser will use to establish the property’s value:
- The total square footage and lot size
- The age of the home
- The property’s location and neighborhood characteristics
- Any upgrades or remodeling
- Amenities, appliances and utilities
Based on these factors, the appraiser will provide a report that includes an informed estimation of the home’s value.
So why is this important?
A home appraisal benefits both lenders and buyers alike. To the buyer, a positive home appraisal report can exempt you from purchasing private mortgage insurance.
A home appraisal can also help you get value for your money. If the asking price is significantly higher than the appraiser’s valuation, you may use the appraisal report to negotiate a lower price for the home based on professional opinion.
Protecting your rights
A home purchase is a big deal. As such, it is imperative that you get everything right from the start. Learning more about the real estate purchase process can help you avoid costly mistakes that can hurt your investment down the road.
