Anita Kurup
Home appraisal is an important step before buying a property. An appraisal is an expert opinion of a licensed professional who investigates and determines the current value of a property. Appraisers have an understanding of neighbourhood housing trends and market conditions.
Home appraisals help you understand the real value of the property and prevents you from over paying for it. Usually, banks use certified appraisers to evaluate the property when you apply for a loan. As a buyer, you are often required to pay for the valuation. Property valuation is important to banks and financial institutions as they need to be assured the value of the property is not less than the loan amount applied. Other than financial institutions, real estate valuation is important for investors, insurers, and realtors as well.
So how do appraisers arrive at the value of a property?
Appraisers use a few basic approaches to determine the value of a property. A property appraisal is an estimate of a property’s value. An appraiser checks if you are paying more for a property compared to the cost of construction if you were to build it yourself plus the cost of the land. Appraisers will look for factors like:
- Location
- Property layout
- Amenities Offered
- Quality of Construction
- Internal and external structural conditions
- Safety code violations,
- Sale value of similar properties in the locality, and
- In case of independent houses, the age of the property as well.
Appraisers will also check if the property has the following:
- No encumbrance certificate
- All necessary sanctions
- Proper documentation, and
- Appreciating resale value.
Once the appraiser report is ready, it is sent to the banks or other lending institutions and loans are sanctioned based on this report. Remember to get a copy for yourself.