From part 1 of this blog series, we’ll continue to answer to some of the most frequently asked questions about home appraisals.

Whether you are buying, selling, refinancing, settling an estate, or simply trying to understand your property’s current value, a home appraisal can provide valuable insight. However, many homeowners are unfamiliar with what an appraisal involves, what an appraiser looks for, and how the final value is determined.

At Michigan Home Appraisal, we believe homeowners should understand the appraisal process before an appraiser arrives at their door. Below are answers to some of the most frequently asked questions about home appraisals.

What Are Comparable Sales?

Comparable sales are recently sold properties that are similar to the subject property and provide useful evidence of market value.

An appraiser typically considers similarities and differences between the subject property and comparable sales, including location, size, age, condition, features, and other relevant characteristics.

The best comparable sales are not necessarily the homes located closest to the subject property. An appraiser must consider which properties provide the most meaningful evidence of market value.

Does the Listing Price Affect the Appraised Value?

The asking or listing price is not automatically the market value of a property.

A seller may list a home above or below what an appraiser ultimately determines to be its market value. The appraiser’s opinion is based on market data, property characteristics, comparable sales, and professional analysis.

This is one reason an independent appraisal can be particularly useful when determining whether a property’s price is supported by the market.

What Happens If the Appraisal Comes in Lower Than the Purchase Price?

If a home is being purchased with financing and the appraisal is lower than the agreed-upon purchase price, the situation may require further discussion between the buyer, seller, lender, and real estate professionals.

Depending on the circumstances, the parties may renegotiate the purchase price, the buyer may make a larger down payment, or other options may be considered.

The specific consequences depend on the loan program and transaction.

How Long Is an Appraisal Good For?

An appraisal represents an opinion of market value as of a specific effective date. Because real estate markets can change, an appraisal does not necessarily remain accurate indefinitely.

The length of time an appraisal can be used depends on its purpose, the lender or organization requesting it, and the circumstances surrounding the property and market.

Can I Use an Old Appraisal for a New Transaction?

Sometimes, but it depends on the purpose of the appraisal and the requirements of the party requesting it.

A previous appraisal may provide useful historical information, but a new appraisal may be required when current market conditions or property changes need to be considered.

If you are unsure whether an existing appraisal can be used, check with the lender, attorney, financial professional, or other party requesting the valuation.

Does the Appraiser Know the Contract Price?

In many appraisal assignments, particularly those related to a purchase transaction, the appraiser may have access to information about the purchase agreement. However, the appraiser’s responsibility is to develop an independent opinion of market value based on relevant data and analysis.

The contract price is one piece of information and does not automatically determine the appraised value.

How Can I Prepare for a Home Appraisal?

The best preparation is to make sure the appraiser can easily access the property and that important information is available.

Homeowners may want to:

• Make sure all areas of the property are accessible
• Complete minor maintenance items when practical
• Provide a list of significant improvements
• Provide documentation for major renovations when available
• Identify additions or finished areas
• Make sure the exterior of the property is accessible
• Provide information about features that may not be immediately obvious

Preparation cannot guarantee a particular value, but it can help ensure the appraiser has the information needed to complete a thorough assignment.

Is an Appraisal the Same as a Home Inspection?

No. An appraisal and a home inspection serve different purposes.

A home inspector evaluates the physical condition and components of a property and may identify potential defects or maintenance concerns. An appraiser’s primary purpose is to develop an opinion of market value.

Although an appraiser observes the property’s condition, they are not performing the same type of detailed examination as a home inspector.

How Much Does a Home Appraisal Cost?

The cost of an appraisal can vary depending on the property, location, assignment type, complexity, and intended use of the report.

A standard residential appraisal may cost less than an assignment involving a large, unusual, or complex property.

The best way to determine the cost is to contact a qualified local appraiser and provide details about the property and the purpose of the appraisal.

Why Choose a Local Michigan Appraiser?

Real estate markets can vary significantly from one community to another. A local appraiser brings knowledge of the neighborhoods, market conditions, property characteristics, and comparable sales relevant to the area.

For homeowners throughout Michigan, working with an experienced local appraiser can provide valuable insight into the factors affecting property value.

A home appraisal can seem complicated, but understanding the basics can make the process much easier. From the initial property inspection to researching comparable sales and analyzing market conditions, an appraiser considers numerous factors when developing an opinion of value.

Whether you need an appraisal for a purchase, refinance, estate, divorce, tax planning, or another purpose, choosing an experienced professional is an important part of obtaining a credible and well-supported valuation.

If you need a professional Michigan Home Appraisal, our experienced appraisers are here to help. Contact Michigan Home Appraisal to learn more about our residential appraisal services and how we can assist with your specific valuation needs.