What is a Home Appraisal and How Does it Work?
If you’re buying, selling, or refinancing a home, you will almost certainly encounter the term “home appraisal.” An appraisal is a critical part of the real estate process, but many people don’t fully understand what it is or how it works.
This guide explains the home appraisal process in simple terms.
What is a Home Appraisal?
A home appraisal is an unbiased, professional opinion of a property’s value. It is conducted by a state-licensed or certified appraiser who has no financial interest in the transaction. The primary purpose of an appraisal is to ensure that the price of the property is justified by its condition, features, and location, thereby protecting the lender from loaning more money than the home is worth.
When is an Appraisal Needed?
- Buying a Home: Your mortgage lender will require an appraisal to confirm that the home’s value is at least as much as the loan amount.
- Selling a Home: While not required, some sellers get an appraisal before listing to help them set a fair and realistic asking price.
- Refinancing a Mortgage: Your lender will need an appraisal to determine your home’s current value, which affects your loan-to-value (LTV) ratio and the terms of your new loan.
The Appraisal Process: What Do Appraisers Look For?
An appraiser will conduct a thorough evaluation of the property. This includes:
- The Site Visit: The appraiser will visit the home to conduct a visual inspection. They will measure the square footage, note the layout, and assess the overall condition of the property, both inside and out.
- Evaluating Condition and Features: They will look at the quality and condition of the roof, foundation, walls, and major systems (HVAC, plumbing, electrical). They will also note desirable features like a modern kitchen, updated bathrooms, or a finished basement.
- Analyzing “Comps”: This is one of the most important parts of the appraisal. The appraiser will research recent sales of comparable homes (“comps”) in the same neighborhood. They will compare your home to these comps and make adjustments based on differences in size, condition, and features.
- The Final Report: The appraiser will compile all this information into a detailed official report that includes photos, analysis, and their final, unbiased opinion of the property’s value.
How DomiDocs Helps with the Appraisal Process
While you can’t influence an appraiser’s opinion, you can be prepared with organized documentation, and DomiDocs is the perfect tool for this.
1. A Record of All Upgrades and Repairs
You can provide the appraiser with a detailed list of all the improvements you’ve made to the home. With DomiDocs, you have a complete, dated service log and a digital vault containing the receipts for that new roof, updated HVAC system, or kitchen renovation. This organized record demonstrates your investment in the property and ensures the appraiser doesn’t overlook any valuable upgrades.
2. Secure Storage for Your Appraisal Report
Your appraisal report is a critical document that contains a wealth of information about your property. The DomiDocs secure vault is the ideal place to store this report for your records. It can be valuable for future refinancing, appealing your property taxes, or as a reference when you decide to sell.
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