Real estate appraisal (“property valuation”) is the process of developing a perspective of value for real property. Once a ready, willing, and reasonable buyer has determined the price at which they are willing to pay, a lender will want to verify that value. It is an important part of the process as every property is unique in features and characteristics. An appraisal helps in various decision points. The seller can use the appraisal as a basis for re-pricing, sometimes if a lender denies a loan based on the appraisal. Some buyers may choose to hire an appraiser before they make an offer, as a way to gauge and leverage their offer. Lenders use appraisals, as one of the forms of protection for the lender, in order to predict value so they to know how much money to credit to their borrowers.
The important factors in a house appraisal are:
• Dwelling type (e.g., one-story, two-story, split-level, factory-built, custom-built) • Features (including design) - quality of materials used, etc. • Improvements made • Comparable sales • Location - type of neighborhood (business, residential, agricultural, etc.), zoning areas, proximity to other establishments • Age of property • Size • Depreciation • Amenities Condition, of course, is a crucial factor in valuation. Location is also a factor; however, as property cannot change location, upgrades or improvements to a residential property often can
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