It is NOT based on…
- What you have in it (renovations do NOT result in a dollar-for-dollar increase in the selling price).
- What you NEED to get out of it.
- What it is appraised for.
- What you heard your neighbor’s house sold for.
- What the tax office says it’s worth.
- Based on memories and treasures.
- Based on the price of homes where you are moving.
It IS based on…
- Today’s market.
- Today’s competition.
- Today’s financing.
- Today’s economic conditions.
- The buyer’s perception of the property condition.
What is “appraisal” or “appraised” value and what does it have to do with pricing my house?
An appraisal is an unbiased professional opinion of a home’s value. It is used to determine whether the home’s contract price is appropriate given the home’s condition, location and features. Lenders want to make sure that homeowners are not overborrowing for a property because the home serves as collateral for the mortgage. If the borrower should default on the mortgage and go into foreclosure, the lender will recoup the money it lent by selling the home. The appraisal helps the bank protect itself against lending more than it might be able to recover in this worst-case scenario.
A property’s appraisal value is influenced by recent sales of similar properties and by current market trends. The home’s amenities, the number of bedrooms and bathrooms, floor plan functionality and square footage are also key factors in assessing the home’s value. The appraiser must do a complete visual inspection of the interior and exterior and note any conditions that adversely affect the property’s value, such as needed repairs.