What Does the Appraised Value of a Home Mean?

If you are planning on purchasing a home or are already in contract to purchase a particular property, chances are that you know that an appraisal is needed if you expect a bank to loan you the money to complete the transaction. An appraisal is the best way that an investor, who has not seen nor has the time or resources to go see, the property in person. Instead, the appraisal is completed by a disinterested 3rd party licensed in the field of appraisals and valuations who then sends the completed report to the lender and yourself, so you can review the findings before deciding whether or not to continue with the transaction.

What can you expect to find in an appraisal report?

An appraisal report is usually 20 to 30 pages long, and it includes a wealth of information that you, as the buyer, can use to your advantage. In essence, the purpose of an appraisal is to verify whether or not the property in question is worth the asking price. The report itself gives you the certified value that the appraiser thinks it is worth backed by current market data like recent closed sales, pending sales and current listed prices for homes that match or are similar to the property in question. It also includes actual photos from the subject property and front-view photos of some of the comparables used in determining value. You are also given a value for how much the property is likely to sell for and another that determines how much it costs to construct it from the ground up. All of these details are to your advantage as you can use them as leverage with the seller to renegotiate if needed.

Appraisals are a necessary part of the real estate process, especially if you are looking for a loan from a financial institution. By understanding the contents of an appraisal report, you give yourself a much needed bargaining chip in negotiations.