Introduction: - If you are looking to sell your house but are unsure what your property's value is, you can check the asking price of comparable local properties and the prices achieved for recent sales to estimate. Some use the words valuation and market appraisal interchangeably, but these are completely different terms.
A surveyor does a formal valuation when you apply for a mortgage, and a full valuation is an evidence-based opinion. A market appraisal is where an agent estimates the value of your property for sale purposes and provides a possible price.
Such a home appraisal calculates the property's current market worth, considering what the market responds to and other factors. Such appraisals may be offered as a free service by real estate agencies, but a valuation is a written report on the property, offered for a fee.
A surveyor is invariably employed to conduct a formal property valuation when you apply for a mortgage. The surveyor must be suitably qualified to make an accurate assessment of the value of your property.
It is normal for mortgage lenders to insist that valuations be undertaken by a paid RICS Registered Valuer who is qualified to prepare the valuation document. A full valuation is an evidence-based opinion with an element of subjectivity.
10 Easy Ways to Get Your House Ready for an Appraisal
First, make a home appraisal checklist to decide upon your home appraisal.
1. Take Due Care of The Home Before Setting for The Appraisal: -
If you want to sell the house, you may want to know what appraisers do. So try to think like an appraiser. To make a great first impression, clean your home and highlight those special features of your home that may raise the property's value, such as a striking fireplace, crown moulding or imported tiles.
2. Plan A Nice Meeting with The Appraiser: -
Your home must indeed be in good condition to attract appraisers. A genuine appraiser will search for a genuine seller as their reports try to convey all the relevant information concerning your home. You can be home during the appraisal, but try to stay out of the way, so the appraiser takes measurements or pictures without disruptions or distractions.
It is best to keep young children or pets at family members' houses or neighbours' places to avoid distractions during evaluation.
3. Talk A Little About the Price: -
The faster way to lock in your sale price is to get a pre-listing appraisal before it is advertised for sale. In such cases, a pre-listing appraisal helps get the upper hand in knowing precisely how much an appraiser will value your home, so there are no surprises.
It is one of the most important points of the appraisal process because the appraiser would be eager to know about the price. A pre-listing appraisal may be beneficial if your home has certain unique features.
In addition, it helps when the real estate market fluctuates, changing how much home is being valued. If you don't want to pay for a pre-listing appraisal, check the old appraisals, such as when you bought the home, to see what problems were flagged.
4. Recheck All the Basics: -
When the home is under the appraisal process, ensure cleanliness and maintenance. Though cleaning is about the basics, the process is not very simple. Apart from that, it will never end with a single visit. So take care of it all the time until the process ends.
5. Make A List of Whether the Home Needs Any Upgrade: -
If you are preparing for a home appraisal, you should repair broken windows or damaged systems; otherwise, the valuer will assume you haven't looked after your home; they may devalue your property thinking it hasn't received adequate maintenance.
6. Check the Safety Equipment of Your Home: -
Your home appraisal checklist should include all the safety equipment and attachments. Before displaying your home to someone, ensure the home's fire alarm is working properly and check the battery of the doorbell.
7. Try to Add Something That Will Give Better Value: -
Ensure the kitchen and bathroom gets extra attention during a home appraisal. Gather the land survey to verify your property size, compile a list of renovations to your home, including the invoices and warranties, and provide proof of your home's sale price if you received other offers. It helps you and the appraiser — with the process.
8. Take Some Additional Care to The Extra Portion of Your Home: -
You should prepare your house to show to the real estate appraisers by cleaning special sections of the house like the basement or the guest room to impress the appraiser and get the best rates.
9. Be Comfortable and Calm During the Meeting with the Appraiser: -
Poor display, dirty, full of mess or bad smells in rooms, hurts a home appraisal. Undesirable home improvements like gothic decoratives or stone cladding can harm the property's value.
10. Let Your Appraiser Know About the Neighborhood:
You may have to inform your appraiser about the surroundings and the neighbourhood.
The Concept of A Home Appraisal: -
Appraisers are licensed professionals who provide a qualified opinion of value. They are considered third-party participants in the transaction. Their work confirms that you (as the home buyer or homeowner) receive a fair, unbiased price for your property.
A home appraisal is an expert view from a certified, state-licensed professional who determines the property's value. An appraisal protects the lender from paying too much for a property worth less than invested. It is an unbiased, professional opinion on the value of a home.
A valuation conducted by an RICS surveyor might cost between £150 to £800, depending on where you are located and the property's size and value. If you want to get loans, banks demand fees for valuations related to mortgages. A valuation is considered a formal document as an expert surveyor does it. Valuations may come at a cost and be used in legal proceedings.
A home appraisal is a much more thorough evaluation. Lenders typically require a professional appraisal on the property during a purchase or a refinance transaction. It helps determine fair market value and the amount of loan-to-value.
While an estate agent valuation is beneficial for the buyer and seller, a mortgage valuation is used to confirm to a lender how much a property is worth and whether the mortgage on said property would be secure, focusing most on the parts of a property that are likely to impact on its long-term value.
A professional real estate appraiser assigns appraised value to a property; in contrast, the market value of a property is determined by buyers and what they are willing to pay for it.
So, you need to understand how the appraisal is made if you are buying a property.
What Are the Things That a Home Appraiser Searches For?
At the time of property valuation, the valuator behaves like a prospective buyer. First, they assess the land where the property stands based on topography, location and size of the plot of land, and the property's zoning and future development potential.
The real estate value is not just determined by what is on the land; there is always the potential for rezoning and future development. Therefore, your estate agent, or valuator, will try to gather information on recent sales and current property prices in your area to guide what you can expect your property to be valued at.
First, inside the building, the valuator will measure the size of the building and take note of the number and types of rooms, the fittings and fixtures, and the age of the property. Then, the house is examined from the outside to point out all kinds of defects and faults.
Physical characteristics such as quality of the material, location of the house, neighbourhood, surrounding view and transport facilities are mainly included in the criteria.
The property's condition and structural integrity are important factors in the valuation process. Things such as dry rot or rising dampness can influence the valuation of a property, and it can often be the negotiation point for buyers to lower the asking price.
Externally, many other factors like transportation facilities, number of garages and other useful outbuildings add to the value. The evaluator will often take pictures of the property, highlighting the most important features.
Nowadays people don't usually buy a house without additional parking facilities so you may get better value for an extra parking area. The interior parts, such as the rooms' position, size, and area, are probably the most important things appraisers check.
The owners won't ignore a single feature or area. For Example, investing in kitchen renovations and bathrooms can multiply the appraisal value significantly.
Many owners prefer to sell furnished homes, but it is important to have adequate space and functionality.
How Do Appraisers Determine a Property's Value?
If you are wondering what to include in your home appraisal checklist, here are some factors that appraisers look for in a property:
Most property valuers will get inside and outside pictures during the valuation process. During the valuation, you can ask questions to the surveyors. For example, you might want to know how you can increase the property's value or what fixes need to be made.
A valuation is different from a property survey, which gives more detail about the structural condition of the building. If you want to get this information, you'll have to arrange a separate survey such as a homebuyer report or building survey.
A typical property valuation can take over an hour to complete a thorough assessment of the interior and exterior of the property. It naturally depends on the size of the property, the plot, and any outbuildings included in the valuation.
How Do Appraisers Check Your House?
Most homeowners are completely unaware of the home appraisal process. First, your property valuer will assess the property- Inside, they will measure walls and note any fixtures or fittings that may affect the value. Externally, they will take note of the quality of access, parking, location, and size of the plot.
They will also look at the exterior characteristics such as the patio, terrace, balcony, garden, garage, brickwork and roof.
You may have to collect homeowner's documents, gather your land survey to verify the property size, compile a list of renovations like the invoices and warranties, and provide proof of your home's sale price or if you received an offer. The paperwork helps you — and the appraiser — with the process.
Things That Are Harmful to A Home Appraisal
Before contacting a real estate appraiser, you must know what hurts a home appraisal:
The presence of Japanese knotweed, a house near the fast-food chain, high crime rate, nuisance neighbours and extreme climatic conditions can lower valuation and asking price.
Buyers with children may seek a house with no air and noise pollution, and they could easily be put off if they are concerned about low air quality. The appraiser may reduce the asking prices if a property is situated near a motorway or busy railway line. One should keep such aspects in mind before preparing for a home appraisal.
How Long Does the Home Appraisal Process Take?
Once the mortgage lender's underwriter gets a copy of your survey, they will check to see if the valuation makes sense to ensure no issues with the property highlighted in the report. The entire valuation process takes around two weeks to complete on average from start to finish.
If you are a buyer, you will receive all the extra documents and a copy of the original report. Once the contract reaches the bank, the real estate appraisers evaluate the value in the current marketplace.
What Factors Do Appraisers Check During Refinancing?
You may want to know - what do appraisers do during refinancing? First, appraisers look at the plot's shape, size, topography, and encroachments. Next, they will check the amenities such as street utilities and vehicular access. Part of the evaluation process includes whether the home's characteristics are compatible with the market.
A riskier home loan carries a higher interest rate, so each property must have a value that maintains a certain threshold. Otherwise, one may have to pay additional insurances with high- interest rates.
A property valuation appointment can take some time, as the evaluator will have to assess each part of your property. In addition, you may have to get a full and proper valuation, so make sure to set aside adequate time for the appointment and ask any questions you may have about the valuation process.
Experts look at comparable properties sold in the market to estimate the value. Finally, the evaluator will conduct an internal and external inspection of the property like one typically does when viewing a property for sale. Any negativity, such as damp portions or stagnant drains, will reduce the appraisal price automatically.
Though different professionals may have different opinions of the value, if the valuation is conducted as per the rules (as mentioned in RICS Red Book), it can get an approximate value with up to +/-10% discrepancy.