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Things are getting exciting for you. You went to your lender and you were pre-approved for a $250,000 mortgage. You went shopping and found a house that could be covered by your mortgage. However, did you ever wonder if this is the real worth of your property? Could it be possible that your dream house could be worth lesser? This would also make you question if it can be a good investment property, which then could give you a profit in the future.
You will not know this unless you undergo home appraisal. To understand this process, read on...
How Home Appraisal is Done
You can obtain a home appraisal just by hiring a licensed appraiser. These people are tasked to give their opinion about the true value of the property.
Home appraisal can be done in three different ways. The first one is through sales comparison approach. This is the most commonly used method for residential homes like single-family dwellings. This process is similar to making a CMA because the appraiser would make use of comps. Comps selected are usually within the same area. They have similar features close to that of what is being sold or bought and ideally, should be sold within the past 6 months.
The second approach is through cost. The value of the property will be based on the dollar value of the land and the reconstruction cost of the property. The appraiser would also have to deduct any depreciation. Most commercially used properties are valuated this way.
The third is income approach. It is another way of valuing commercial properties that generates income. The value is determined by projecting the possible net income that the property can generate.
How to Get Appraisals
Anyone can get an appraisal. Sellers, buyers, lenders: all of them can avail of this service. Most of the time, appraisals are being ordered by mortgage lenders to their buyers for determining the real value of the loan. Buyers pay for this service every time they apply for mortgage.
You can get tons of appraiser locally or through the internet. The best appraisers in town are usually the reputable or commonly, recommended by real estate agents. Appraisers for banks are also one to keep in mind. They can be accredited to a particular organization too like Appraiser Foundation. However, the best services come from appraisers, which are licensed, impartial and highly recommended by the people.
Benefits of Home Appraisal
For the seller, a home appraisal can be very helpful. This can be one basis for setting the price. If their homes were not overpriced, the more enticing it would be in the market and the faster it would sell.
For the buyers, a home appraisal helps them determine the real value of the property. This also helps them determine whether the property will be valuable in the future or not. Moreover, the results of the appraisal helps buyers ascertain if the property is overpriced or not.
For the lenders, this will help them create healthy financial statements. Appraisals do not only help them determine the amount of mortgage to grant to their borrowers but it also helps them determine which properties can be considered good investments.
Learn more about properties with great values in Property for Sale in Estates at Spectrum and Estates at Spectrum Homes for Sale.