Understanding Real Estate: Appraised Value

What is your home worth?  This is the money questions, literally.  The value of your home or home you are purchasing is established by a few different factors.  In order to get an accurate estimate on a properties value, you must pay for an appraisal.  The cost is typically included in your closing costs.

An appraiser is a licensed professional who specializes in property value assessments. The appraiser will measure the home from the outside to determine square footage and also each room inside.  They take notes on the homes layout, number of bedrooms, bathroom, ect.

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The appraiser also makes a determination on the general condition, and the appeal of the home, as well, and the functional layout.  The report will contain information on the age of the home, mechanicals and roof, size of the home and property (yard), location, features and updates (bedrooms, baths, basement, ect.), major structural improvements, and architectural features.

Surprisingly items such as new roof, new furnace and finished basements do not add much value to the home.  However, many loan programs require a roof and furnace to be still within its useful life. The value of the home is found by using the cost approach, the compassion approach, and/or the income approach. For more information on these approaches visit our post here.  Once the value is established, the report is submitted to the bank for their review.