For home buyers, a home appraisal is required for financing and is also the authority in determining the market value of a property one is planning to purchase.
Primarily, an appraisal serves to prove that while no two properties are completely the same or identical based on their location, we can rely on “comps” to determine a fair market value. Prior to finance companies accepting loan applications, a licensed professional is assigned to inspect the prospective property. These individuals are called “property appraisers” and their role is different from that of a home inspector. They are tasked to value the property by both a sales comparison and a cost approach, both of which are important estimates for you the buyer.
Since appraisals are an estimate of the value performed by a third party, known as a Certified Real Estate Appraiser (CREA), they carry a lot of weight in a transaction. Appraisals generally include: details of the property, the conditions of the home, a comparison of other properties in the area, an evaluation of the real estate market in the area, and a description of the type of area where the property is located. For a residential property, the usual cost for this service is between $250 and $500, with variance depending on the complexity of the appraisal and the size of the property. As a separate service (and fee), the lender may also wish to have a surveyor examine and certify the property’s boundaries as well.
There are many benefits to home appraisals. One advantage is learning whether the interested property is over or under priced. This may help a potential buyer to renegotiate the pending sales contract. If the property appraises for less than the price one has agreed to pay, then the seller may have to lower the sales price in order to satisfy the buyer. If not, the buyer may have to make a larger down payment since the lender is not going to lend more than a certain percentage of the value. Another benefit of an appraisal is to provide the ability to understand the market trends of the neighborhood, which can help the new owners determine what to expect regarding future price changes in the future.
The Law Office of Donna Hearne-Gousse is located in Royal Palm Beach and serves all of Palm Beach County. For more information regarding appraisal information in Palm Beach, FL or Real Estate Title Services surrounding areas, feel free to contact us with any questions you may have.
The Law Office of Donna Hearne-Gousse