What You Need to Know About Real Estate Appraisals

Knowing the value of a property is essential whether you are buying or selling residential property. While you may think that you know how much a property is worth, you will still likely need to seek out a real estate appraisal. During a property appraisal, a real estate appraiser examines a property and researches to determine the fair market value. Appraisals are very important and something that you need to know about before starting a real estate transaction.

Appraisals Can Delay a Contract

The first thing you should know about real estate appraisals is that buyers, sellers, and lenders take them seriously. Appraisal issues are a common reason why contracts are delayed. Appraisals are the culprit in up to 18 percent of contract delays, and there are many reasons why this is the case. If a property appraises for less than anticipated, a buyer may want to renegotiate. A lower appraisal may also mean that a lender will not provide a mortgage to a buyer. A higher than expected appraisal can also mean that the seller wants to walk away from a contract.

What Property Appraisals Include 

Knowing what property appraisals include can help you understand what to expect from this type of report. Real estate appraisals include details about the property and any factors that may hurt the value. Appraisals will also include details about the local real estate market as well as the estimated sales time for the property. If there are nearby properties, an appraisal may also include how the appraised property compares to these other properties. Appraisals are typically very detailed and will offer up a lot of helpful information.

What Appraisals Cost

If you are buying or selling residential real estate, you may want to skip out on any extra expenses. However, a real estate appraisal is well worth the expense. Both buyers and sellers can obtain an appraisal. For buyers, a property appraisal prevents them from buying a home that's not worth what they paid for it. For sellers, an appraisal can make setting an asking price a much easier task. Be sure to ask appraisers how much their services cost.

Real estate appraisals can be very valuable, but there are a few things that you should know. While an appraisal may be necessary, you may end up with a contract delay if the results are not what you expect. Knowing what appraisers include in their reports can make it easier to understand how a property value is determined. Property appraisals will also cost a few hundred dollars but are well worth the cost.