What Is an Appraisal?

An appraisal is a 澳洲幸运5官方开奖结果体彩网:valuation of property, such as real estate, a business, a collectible, or an antique, by the estimate of an authorized person. The authorized appraiser must have a designation from a regulatory body governing the appraiser's jurisdiction. Appraisals are typically used for insurance and taxation purposes or to determine a possible ꦯselling price for an 🌱item or property. In many cases, lenders require appraisals before approving mortgages.

Understanding Appraisals

Appraisals are used in many types of transactions, including real estate. If a home valuation, for example, comes in below the amount of the purchase price, mortgage lenders are likely to decline to fund the deal. Unless the prospective buyer is willing and able to come up with the difference between the 澳洲幸运5官方开奖结果体彩网:appraised value and the lender's financ🏅ing offer, the tr🤪ansaction will not go forward.

The appraiser can use any number of valuation methods to determine the appropriate value of an item or property, including comparing the 澳洲幸运5官方开奖结果体彩网:current market value of similar properties or objects.

Appraisals are also done for tax purposes when determining the value of 澳洲幸运5官方开奖结果体彩网:charitable donations for 澳洲幸运5官方开奖结果体彩网:itemized deductions. Deductions can reduce your taxes owed to the IRS by deducting the value of your donation from your taxable income.

Appraisals can also be a helpful🥂 tool in resolving conflicts between heirs to an estate by establishing the value of 𓃲the real estate or personal property to be divided.

Types of Appraisals

Home Appraisals

A home valuation is necessary when buying and selling a home, as well as when refinancing an existing mortgage. A 澳洲幸运5官方开奖结果体彩网:refinance is when a loan or mortgage🏅 is reevaluated and updated to curren🐈t interest rates and new terms.

An appraisal determines the home's value to ensure that the price reflects the home's condition, age, location, and features, such as the number of bathrooms. Valuations also help banks and lenders avoid lending more money to the borrower than the house is worth.

In the event of default, when the borrower can't make the payments anymore, the bank uses the appraisal to value the home. If the home is in 澳洲幸运5官方开奖结果体彩网:foreclosure, whereby the bank takes possession of it, it mꦬust be resold to help the lender recoup any losses from making the mortgage loan.

It's important to remember that when a bank lends for a mortgage, it gives the full amount of the home's value to the seller on the date it's sold. In other words, the bank is out the money and, in return, has a promise to pay, plus interest, from the borrower. As a result, the valuation is important to the lending process since it helps the bank avoid losses and protect itself against lending more than it might be able to recover if the borrower defaults.

Collectibles or Antiques

Professional appraisals can be done for many items, including 澳洲幸运5官方开奖结果体彩网:collectibles, antiques, or grandma's silver. Ideally, you'll want multiple valuations for an item from accredited professionals. Appraisers might 澳洲𝔍幸运5官方开奖结果体彩网:charge an hourly rate or a flat fee. 

A certified appraiser's valuation will likely be fair and unbiased, whereas the local collectible shop is incentivized to offer you less for the item. Also, owners can get an 澳洲幸运5官方开奖结果体彩网:idea of an item's value by checking collectible magazines and online appraisal websites. Most websites charge a small fee, such as $10, to value an item. Of course, obtaining a value online is done through photos of the item and is not an official valuation, but it should give you an idea of what it's worth before proceeding. If you decide to pursue an appraisal, the American Society of Appraisers has thousands of members and is a great place to begin searching for an accredited professional.

Appraisals and Insurance

Some types of insurance policies also require appraisals of goods being insured. Homeowners and renters insurance policies protect policyholders against losing 澳洲幸运5官方开奖结果体彩网:personal property due to theft or damage. These blanket policies cover items up to a preset dollar limit. Obtaining an appraisal of a home's 💦contents creates an inventory of the owner's property and establishes its value, which helps to ensure a swift settlement if a claim is filed.

When the value of specific items exceeds a homeowners policy limit, the policyholder may wish to obtain additional insurance that covers 澳洲幸运5官方开奖结果体彩网:luxury items such as jewelry or collectibles, including art objects and antiques. Before issuing personal property insurance policies for high-end items, many 澳洲幸运5官方开奖结果体彩网:insurance underwriters require applicants to have the object appraised. The appraisal crꦯeates a record ⭕of the item's existence and description. It also helps establish the item's actual value.

Some insurance contracts include an appraisal clause that specifies the owner agrees to obtain an appraisal from a mutually agreeable expert in the event of a dispute between the owner and the insurance company. Neutral appraisals can speed the💎 resolution of a settlement and keep disputes from escalating into lengthy and expensive lawsuits.

Home Appraisal Process and Cost

The home appraisal process typically begins after a buyer makes an offer on a home and the seller accepts that offer. The buyer's mortgage lender or broker may order the appraisal on their behalf, though the buyer is typically expected to pay for it out of pocket. On average, a home appraisal for a single-family property runs around $500.

Once the appraisal is ordered, the appraiser will schedule a time to visit the property. The appraiser will then conduct a thorough review of the home's interior and exterior to determine its worth. This may require them to take measurements or photos of the property. Appraisals can take a few minutes to a few hours to complete, depending on the details of the home and the appraiser's methods.

After visiting the home, the appraiser will use the information they've collected to create a reasonable estimate of the home's value. At this stage, the appraiser will also look at the values of comparable homes in the area. Using these comps and what they've learned from visiting the home, the appraiser will prepare an appraisal report with a figure representing their perceived value of the home.

A copy of this appraisal report is then shared with the buyer and the buyer's mortgage lender. It can take anywhere from a week to 10 days for the report to be completed. Sellers can also request a copy of the report.

If a buyer disagrees with the appraisal report, they can request 🅺a reconsideration from the lender or opt to pay for a second appraisal.

How To Improve Your Home's Appraisal Value

The appraisal process is meant to be objective, but appraisers are human. Good curb appeal and clean, uncluttered rooms send a message of a well-maintained home. And they can be achieved without a great deal of time or expense. There are some easy ways to quickly 澳洲幸运5官方开奖结果体彩网:improve the appraised value of your home:

• De-clutter your home, make minor repairs, and freshen the paint to show the home is well-maintained.
• Clean up your yard and clear out leaves or dead plants to improve curb appeal.
• Point out any major improvements you've made to the appraiser in case they miss them.

On the other hand, you should avoid big, expensive improvements just to increase your home's appraisal value. They generally don't pay off.

Make sure you know your rights as well. If you hire the appraiser to determine your home’s value, the appraisal belongs to you. If you’re refinancing your mortgage and the lender hires the appraiser, the lender is required to provide you with a copy–possibly for a reasonable fee–of the appraisal and any other home value estimates.

If you think the appraiser has the value wrong, first review the written appraisal for errors. Check whether the comps the appraiser chose are reasonably similar to your home. If you still think the price is incorrect, you can appeal the valuation with your lender or ask it to order a second appraisal. 

The Bottom Line

Although many people associate appraisals with the homebuying process, any unique item can be appraised. Appraisals are usually essential in setting the price of an item or property, so getting a good appraisal is vital if you're purchasing or selling a home.