Understanding the Appraisal Process in a Real Estate Sale

If you’re thinking about buying, selling, or refinancing your home in order to take advantage of a better interest rate, the appraised value of your property is an important number. An appraisal will help determine how much you will likely be able to get for your home if you sell, or in the case of an refi, which usually only allows a portion of the property’s value to be included in a new loan, will determine how much a lender will be willing to loan you, since the loan received from a refi usually only includes a percentage of the home’s value.

Appraisers are working on behalf of the lender and will assess the value of your property based on the value of similar properties in your neighborhood. Comparable properties usually must be located within a few miles of the property being assessed, must be of similar square footage, and should be built within 10 years or so of the property in question.

Do recent improvements elevate a home’s value?

While you may have made numerous improvements in anticipation of boosting the value of your home for a bigger profit when you sell, a new roof, a bathroom and kitchen remodel, or other new features that should give your home an edge over the comparable properties may not make much of a difference, which may be disappointing to hear.

When an assessor looks over your property, he or she will take measurements and photographs, and will also make notes of improvements. But real estate assessors base their final assessment on six different labels – poor, fair, average, good, very good, and excellent – along with square footage, location, and other considerations.

After using those ratings to determine the condition of your home, taking into consideration the improvements you’ve put into your home, they make that final assessment by comparing your home to the homes they’ve chosen as similar to yours, which are also given a rating, without being seen in person.

Even if your home is given a higher rating than the homes your assessor is comparing it to, you are not likely to recoup the entire value of the investment you spent making improvements.

For buyers, an assessment is required because lenders will not loan money for a mortgage if the property’s value is less than the sale price, a situation that would cause problems if the buyer defaulted on the loan because the bank couldn’t sell it for enough to cover the overall cost of the loan.

Contact a Florida Real Estate Attorney

If you have questions about why you need a home appraisal when it comes time to sell your home or property, contact real estate attorney Ricardo Rodriguez at Rodriguez Law at (305) 262-8226 today.

About Rodriguez Law, P.L.

Rodriguez Law, P.L. is dedicated to providing quality personal legal services to our clients. Our reputation for combining quality, knowledge, and technology to deliver efficiency and value makes us one of the most trusted law offices in Miami-Dade and Broward.