I often get questions about appraisals, so I thought I’d clarify some aspects.
A home appraisal is not the same as a home inspection. In a purchase, the buyer is advised to get an inspection to determine the condition of the home. This is not required nor submitted to the lender.
The primary purpose of an appraisal is to verify the value of the home (for the lender).
The most common way for an appraiser to determine value is by comparing to other, comparable nearby homes that have sold within the last 3-6 months. The size of the home, number of bedrooms, bathrooms, size of the lot, and any detrimental factors (busy, noisy street, dated interior) are compared to the other homes. Although the price per square foot to build is calculated, the comparable sales method is the preferred valuation method.
While the condition of the home will play a part, it is not a critical element, unless there is visible evidence of a problem (such as termites or roof leaks). Still, a clean home, with no clutter, and a maintained yard, will definitely help your home make a good impression. This may give a subtle, overall impression of higher value to the appraiser.
The appraiser tries to give an objective opinion of value. For purchases, appraisers are informed of the sales price. In my experience, the appraiser does try to find comparable sales that will support that price.
If you have questions about home purchases or refinancing, please give me a call. Home financing is a big decision, and I want to help you make the right one.