These days, the appraisal has become a step to a real estate closing that has been proving problematic. To understand the components of an appraisal, we have assembled a list of considerations an appraiser uses when completing an appraisal.
- The market conditions on the date of the sale
- Location, location, location
- The site/view both looking at the property and looking from the property out
- The design and appeal of the dwelling
- The quality of the construction
- The age of the property
- The condition of the property
- Total number of rooms
- Number and types of rooms ( bedrooms, bathrooms, etc.)
- Square footage (gross livable area)
- Is there a basement?
- Is the basement finished? If so, number and types of rooms
- How functional is the property? (good, average, fair, poor)
- Is there central air conditioning?
- What type of car storage is available? (garage, carport, etc)
- Are there any special features that the property offers? (porches, patios, pool, fireplace, special heating/cooling equipment, skylights, etc.)
- Were there any special financing or special sales considerations that might have impacted the value of the comparable properties?
As you can see, many factors come into play as an appraiser develops an appraisal. Other complications can be lack of sales in an area or comparable sales that were distressed sales (short sale or foreclosure.)
When selling a home, a seller must realize that after a contract is agreed to, the property must appraise for contract value for a buyer who is getting a loan. Even cash buyers today are requesting appraisal riders be attached to a contract to make sure they are getting a good value on their home purchase. Sellers, more than ever, must be pricing their homes to not only secure a contract, but pass the appraisal process.
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