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A Practical Guide To Property Appraisal

By Brian Chesson

Whether you’re planning to buy a home, refinance your existing home loan or sell your property, you will need a property appraisal. If you’re a buyer, you need it to protect your investment. If you’re a homeowner, you need it to secure financing or sell your house for a fair price.

A property appraisal is an unbiased determination of the market value of a property by a professional. It’s also an excellent way to get an idea about the status of the local property market.

To help you gain a deeper understanding of how your actual property worth is determined, here’s a primer about property appraisal.

Understanding property appraisal

A property appraisal is an accurate estimate of the value of your property based on the current real estate market. It’s also what real estate agents use to run a comparative market analysis about the properties sold in your area within the last three months.

Appraisal inspection. Generally, appraisers check every part of the house to ensure that it’s still in good structural shape. Also, checking both the interior and exterior can help prevent any safety issues within the property.

Research. Next, the appraiser will have to determine the price of the properties that are similar to their client’s estate. To get better comparative information, appraisers often look into the government records and the home sale information to get all the listings available.

Valuation approach. The appraiser will then decide if the most appropriate way to assess the property’s value is either the sales comparison or the cost-based approach. The latter estimates the probable cost to build the home currently combined with the land’s value.

Primary factors involved in a property appraisal

Property size

When doing a property appraisal, most real estate agents typically look at the size of the entire block, the land structure and even the other areas within the property. They will then compare these measurements against other similar properties near the area.

Number of bedrooms

The number of bedrooms is also significant in property appraisal because, in most cases, having more bedrooms means a higher market value. However, the size of each room and whether it has other features, such as a picturesque view and built-in wardrobes, should also be considered.

Light fixtures and fittings

Although most sellers don’t include fixtures and fittings when selling a property, they can also influence the value of a property. Whilst these elements may seem minor compared to the other aspects of the property, a potential buyer who’s touring your estate might look at everything that they need to fix. If they find these things unattractive or in need of replacement, they may offer a lower price.

Possible home improvements

Almost everyone wants to find a perfect house. Though some imperfection makes a property more interesting, there are a few worse imperfections than others. When checking a property, a real estate agent also inspects for any area of the house that needs improvements or updates.

As a seller, improving the appearance of your property is beneficial. But you don’t need to renovate an entire room or your home. Sometimes, a new layer of paint or replacing the door handles is sufficient. Still, you must weigh the update cost against the chances of selling your property at a higher price.

Getting a house appraised

A property appraisal commonly happens after a buyer offers a price for the property and the estate inspection is complete. If you’re the buyer, you’ll probably need to cover the appraisal costs and create an arrangement for it. Once the process is complete, the lender will receive the end report of the property appraisal. You can also request a copy.

The general cost of conducting a professional appraisal ranges from $300 to $500, depending on the location and the property type. In most cases, a more expensive property costs more compared to others. The entire process will take at least 10 business days to complete. Also, a licensed or certified professional should do the work, and this person should have no connection or interest in the transaction.

Factors that affect a home appraisal negatively

Leaking roofs

If there’s anything that could potentially bring down the value of a property, it’s a leaking roof. Not only can it affect the stability of the foundation, but it can also cause delays in maintenance. Neglecting to address this issue will only cause the problem to worsen and make it more expensive to repair.

Dated finishes

Worn-out bathroom tiles and kitchen countertops can definitely hurt your property appraisal. That’s why before you put your home on the market, make sure to get these elements sorted out to avoid a value drop. Whilst improvements are needed, you should remember not to go overboard with your design choices as this might not appeal to most buyers.

Needed repairs

If the home appraiser notices any part of your house needing repair, it’s always best to be clear that you’ll complete them before closing the sale. Doing so will help you keep the value of the property effectively.

How a cluttered home affects an appraisal

Appraisers underwent professional training to ignore messes and centre around evaluating your property, not your belongings. However, extensive clutter can prevent appraisers from completely accessing every part of your home and its features. Thus, it can potentially lead to a lower appraisal.

Additionally, most people operate on subconscious biases. So once they see how messy your place is, these biases can potentially impact how they’ll assess your property’s value.

Sell your house fast

Selling your house fast is not just about boosting the value of your property. Working with well-established real estate agents can get your property to the right potential buyers. With their personal wealth of knowledge, these agents can help you know your property’s potential market value and give you a more accurate appraisal. More importantly, real estate agents can help you command a higher asking price.

If you want to sell with confidence, we, at Ray White Balmain, can help you maximise your property value. Contact us today.

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