Whether you’ve bought or sold property, if you’re involved in real estate, you’ve likely encountered a home appraisal. A home appraisal is conducted to determine an estimated market value of a property. Once completed, the information is used by real estate agents, buyers, and banks to help them make critical decisions like how to price a home or how much money to loan someone. Because the outcome of an appraisal is so important, it only makes sense that you know what a house appraisal is based on. In the following article, Brass Financial Group explains.
Why Would You Get an Appraisal?
Appraisals are useful in a number of situations. The most common reason for an appraisal is to help a potential seller understand how they should price their home to ensure it moves quickly on the market. Appraisals can also be used by buyers to help them identify key neighborhoods in which to focus their house hunt. Lastly, a homeowner looking to apply for a home equity line of credit (HELOC) would need a house appraisal to determine how much money they can borrow.
Your Home’s Features: Knowing What a House Appraisal is Based On
As always, location is a key factor in determining the value of a property. But, in addition to location, there are many physical factors to consider:
- Age of heater, furnace, HVAC system
- Roof condition
- Age of appliances
- General condition of exterior; chipping paint, deteriorating siding
- Square footage
- Number of bedrooms
- Number of bathrooms
The condition of your home has a big impact on how it’s appraised. A house that needs repairs is not going to appraise as well as one that is move-in ready. The next biggest factor that informs your appraisal is your local market.
Comparative Market Analysis
If you want to know what a house appraisal is based on, you’ll need to understand comparative market analysis (CMA). CMAs are a key part of any accurate appraisal. For example, if you’re planning to sell your home, your realtor will select 3 comparable homes (known as comps) in the area. The comps must have been sold within the last 6 months, ideally even more recently. A comp should be in similar condition and have around the same square footage and numbers of bedrooms and bathrooms. Based on the sale prices of these comps, your realtor can get a good idea of how to price your home.
Working with Brass Financial Group
Now that you know what a house appraisal is based on, we hope you feel better prepared to take the next step in your real estate project. If you need money to buy a new home or if you are looking for a loan, Brass Financial Group can help. Reach out today.