Home Appraisals: What You Should Know

by | Feb 23, 2018 | Home ownership

Reading Time: < 1 minute

One of the most important steps to take when buying a home is to get the potential new home appraised. Appraisers are certified, licensed professionals who determine the real value of a property.

What home appraisals are not

Appraisals differ from the listing price suggested by your realtor, which is an estimate based on what similar properties sold for nearby.
Appraisers also aren’t home inspectors. While appraisers may note any problems they come across, they won’t test your home’s systems or check for code violations.

Methods of home appraisals

Two home appraisal methods appraisers commonly used are the sales comparison approach and the cost approach.
The sales comparison approach is similar to what real estate agents do to determine listing price by comparing the home with several others, except this is a more comprehensive comparison.
The cost approach is primarily for new homes, and it looks at the cost to rebuild the structure.

Benefits of home appraisals

Although home appraisals typically cost several hundred dollars, their costs are outweighed by the money it could save you if you avoid overpaying for a home. Here are 4 benefits of getting your new home appraised.

  1. Protects lenders from financing an overpriced home
  2. Protects you, the buyer, from paying too much for a home
  3. Flags potential issues with the property
  4. Helps you negotiate a fair price