Home  >>  Write  >>  Real Estate  >>  Buying Real Estate  >>  Financing Your Home  >>  Real Estate Appraisal


Real Estate Appraisal - Make Sure You Get Good Value For Your Home

Picture this scenario - you have found a home for sale that you want to buy, you have made an offer to the person selling their home, and you are happy that your housing search has come to an end. But … you can’t ignore that feeling in the pit of your stomach, that maybe you have made a big mistake. If this has happened to you, don’t worry about it – it’s common among people buying homes. Considering the high cost of real estate and the different factors that can impact property appreciation, you should be nervous when buying a home. However, the real estate process has taken into account these fears and one of the most valuable parts of the real estate process is real estate appraisal. When you are looking to buy a home or are negotiating for a home’s sale price, you tend to hear a number of figures regarding the home’s value. However, unlike the comparative market analysis (CMA) that real estate agents  use to determine a sale’s price, a real estate appraisal is conducted by a state licensed real estate appraiser that is independent from the home selling process. The role of the real estate appraiser is to determine the property’s market value based upon the highest and best use of the property. The real estate appraiser report known as the Uniform Residential Appraisal Report is a comprehensive assessment of the property and is the only valuation report that home mortgage lenders will examine when determining whether or not they will approve a mortgage loan to a potential home buyer. There are many potential homebuyers and homeowners who tend to fear what the residential real estate appraisal will reveal. To help you with these concerns, here are the two most common real estate appraisal methods used. The first is the Sale Comparison Approach, in which the home for sale is compared to similar homes in the area. Generally in these reports, the home for sale is compared to at least three similar homes. The second Real Estate Appraisal approach is the Cost Approach, in which a real estate appraisal determines the cost of replacing the property if it were destroyed. This report is generally used for new homes for sale. While real estate appraisals can be stressful, they are highly effective. A residential real estate appraisal report will have an evaluation of the area’s local real estate market, a summary of the property’s flawed characteristics, and a report on issues around the property that can negatively impact the home’s property value. Although the real estate appraisal is comprehensive, it should not be confused for a home inspection, in which it is highly recommended to conduct one before buying a home for sale!