That’s usually one of the first questions that comes to mind when looking at a property….
How do you know what a property is worth? How much should you pay for it? Well, you can get an appraisal….so, what’s an appraisal, where do I get one and why do I need one? But we’re getting ahead of ourselves a little since the appraisal is done after you buy the property.
An appraisal is the process of developing an opinion of value for real property determined by a licensed appraiser based on similar properties that have been sold in the last six months at the time that the appraisal is performed. It is a detailed report that includes, but is not limited to, pertinent facts about the subject property, (the one you are buying) and the comparable properties used in the appraisal, maps, floor plan, photos and certain calculations relating to the values of each property.
Market value is the price that the seller thinks the buyer would be willing to pay for a property. Recent sold properties are considered when determining the market price. They are usually in the same neighborhood or subdivision, are similar in size and features in the home, they’re considered “like” properties.
Once a buyer decides on a property purchase and signs a contract, the next step is contact the lender to finance the property. Part of the loan process is to order and obtain the appraisal, your lender will handle that, it’s a loan requirement and the lender needs to verify the value to make the loan.
Why do you need an appraisal? It confirms to you and the lender that the appraised property value is in agreement with the sales price.
Happy House Hunting!
Loan Officer Houston