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December 3, 2010

Property Valuation Versus Property Appraisal

Filed under: investment — Tags: — admin @ 12:17 am

How can you know what your home is really worth? Why is there such a discrepancy between the values? Much of it has to do with how the values are determined by each professional. Lets take a look at the differences between an appraisal and a valuation.

After years of serving your family as a wonderful and comfortable home, you have made the decision its time to sell your house. Of course you want to get top dollar for your investment so you turn to a professional real estate agent for an appraisal as guidance on how much to ask. You are thrilled with their initial selling estimate only to be confused and frustrated when the valuation report come in $50,000 less.
Appraisals

An appraisal of your property is intended as a guide only and can be prepared by a real estate professional. The preparer takes into account the local area as well as recent sale prices of comparable homes. An appraisal has no legal basis or standing and they are generally requested by sellers looking for an ideal of how much they might get for their home.

Valuations

To have a formal valuation you must turn to a qualified valuer with the necessary training, education and experience to ensure they consider all the issues and features pertaining to your property. You should expect to pay $300-$500 for the valuation and can expect to receive a detailed, written report. Valuing a piece of property can be a complex undertaking and usually takes time to do correctly and will consider items such as:

* Locale and zoning
* Construction and condition of the structure
* Location and positioning on the lot
* Any covenants or encumbrances
* Construction or building defects
* Unique feature of the home

Do I Need An Appraisal or A Valuation?

There are very few times when a valuation is not required as part of a home sale transaction. They are typically required when it is necessary to set a definitive value for a piece of property. Some examples include establishing the value of a deceased persons estate, buying property that has been foreclosed on, or a property settlement. Of course, if a lender is involved in your transaction you will almost certainly be required to have a valuation.

Why ask for an appraisal then? Simply, because they are quick, straightforward estimates of what you might expect your home to sell for. If you are just beginning the process of selling or simply thinking of testing the waters, a real estate professional’s estimate of what you can ask may help you make you decision before you have to spend money on the valuation. (more…)

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