Most homeowners do not look forward to a home appraisal. Homeowners often deem it a necessary evil to selling and buying real estate. This is often the case, because they believe long-standing myths about home appraisal.
There are various misguided beliefs circulating the real estate world about this important service, and knowing the truth about what to expect during your home appraisal can save you a lot of uncertainties that cause anticipation and anxiety before the appraisal.
Getting an appraisal for your property is one of the first steps to learning how to evaluate house value. Because it is such an important part of buying and selling real estate, let us put these myths to rest once and for all.
Myth 1: A home inspection and appraisal are the same
This is false. An appraisal is a service that examines the current real estate values homes. A home inspection, however, identifies issues with the home. It is no surprise that the confusion of a home inspection versus a property appraisal produces anxiety for homeowners. Appraisers analyze an array of items — like the condition of your home and/or property and the location and comparative properties in your area — to identify the market value of your real estate. Lending entities require appraisals as a helpful tool for understanding how to evaluate house value if you are planning to negotiate with a buyer. With that stated, however, there are times when an appraiser provides similar feedback to a home inspector. In the case of certain loans, an appraiser must assess features like running water, chipped paint, down fences, missing handrails, and other property features that may be deemed hazardous. If you know you have any of these issues, then it is advised to fix them when preparing for a property appraisal. The well-kept property will often return better appraisal numbers. This is true for understanding commercial property values in Arkansas too.
Myth 2: Invest more money, and you will get a higher appraisal value
While general upkeep and other property updates could affect the overall market value of your property, a greater investment does not guarantee a greater appraisal. In fact, some “home improvements” actually decrease the value of your property. For a common example, if you have converted your garage into an at-home fitness studio, then your appraiser could give you a lower estimate than you expect because the home had a garage for a reason even if you never used it. In contrast, if you have made certain desired technological improvements to your home, you could increase your home value. To understand which improvements hurt and help your property value, it is vital to do your research before you invest in any renovations. Being knowledgeable about your home renovations will help you learn how to evaluate house value.
Do not worry if your appraisal turns out to be lower than expected, because you have options.
Myth 3: The appraisal gives the amount buyers will pay when you decide to sell
There are many numbers circulating your true real estate value. It is important to understand that the assessed value, the appraised value and the selling price are not going to be the same number. Many terms and expectations in real estate are misleading. While knowing the value of your home is important, it is going to be more of a value range than an actual non-negotiable number. Real estate is negotiable by nature, so prepare for a few varying opinions of your residential or commercial property values in Arkansas. Here is a breakdown of what similar terms actually mean in real estate values estimations:
- Assessed value. This is the value that the local tax assessor will assign your property based on what they believe its value to be in terms of upkeep. This often has no relation to market value.
- Appraised value. The opinion of your real estate values by a professional appraiser. This is determined based on a variety of items including but not limited to, analysis of comparable properties.
- Buyer’s offer. This is what the buyer is willing to pay for your property. Usually, the buyer has researched comparable real estate values in the area and has their idea of what they are willing to pay for the asset.
- Price. While appraised real estate values should be close to fair market value, the two terms are not the same. Basically, the agreed upon selling price is the most competitive price a buyer is willing to pay and the lowest number a seller is willing to take for the property.
When buying or selling residential or commercial property, it is important to do as much research as possible. All of the above numbers will give you a good idea of how to evaluate house value.
Know the truth about home appraisals
The best advice for being prepared for your home appraisal is knowing the truth before the scheduled appraisal. As you can see there are many long-standing myths surrounding the practice. While it is clear why some appraisal myths came about, knowing the real story can benefit you. For further questions about scheduling an appraisal to better understand your residential or commercial property values in Arkansas, give Ferstl a call.
For residential or commercial real estate appraisal services contact Ferstl
Ferstl Valuation Services in Arkansas is a trusted appraiser. Our real estate experts are ready to help you buy, sell, or value your property today. Give us a call to find out how we can help you with your real estate endeavors.