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Ins and Outs of Your Lexington Home Appraisal

A homeowner who is trying to sell a home and attract a buyer needs to know the value of their property. In the appraisal process, the value of a home is determined by an appraiser who is thoroughly informed regarding property values in your real estate market. When a home is appraised, the appraiser examines the property in question and determines the property’s monetary value through one of two appraisal approaches: the sales comparison approach or the cost approach.

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Two Appraisal Approaches

Using the sales comparison approach, the appraiser will compare the home to similar homes that have sold in the same area. The homes that are used as samples to compare with the home in question are known as comparables, or “comps.” Using these comparables, the appraiser comes upon a value for the property in question depending on the cost of the comparables and the particular details including lot size, age of the home, ┬álocation and additional amenities.

The other main approach to home appraisal is the cost approach. Using this approach, an appraiser figures what it would cost to reproduce the property. In addition to factoring the value of the property itself, the appraiser will also look into any land value included in ownership of the property as well as any depreciation the property may experience.

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Myths about Appraisals

  • Appraisals are mainly conducted to benefit the buyers: In fact, the appraisal’s major purpose is to indicate to potential lenders the true value of the property. Lenders don’t want to own a property that requires an expenditure which exceeds its true monetary value.
  • An appraiser may value your home more highly if you are a good housekeeper: Appraisers should be trained to ignore superficial details of a home such as organization and tidiness.
  • Appraisals and home inspections are the same: Appraisals cannot serve as substitutes for real, professional home inspections. While an appraisal is about determining value, home inspections are focused on determining the condition of a home.

How to Handle a Low Appraisal

Unfortunately, appraisals can sometimes have surprising outcomes. If an appraiser has determined your home’s value is much lower than you thought, you need to determine if you can correct any of the factors that led to a low appraisal. You can also consider having a second appraisal which may lead to better results for you as the seller.

Of course, you will not necessarily receive offers for your property that reach your home’s appraisal value. After your appraisal, you will know how much money you can expect for your property. However, potential buyers may still place low offers. You will still have to work to find a buyer who is willing to give you a reasonable offer for your home. For any more information on appraisals or selling your home, please don’t hesitate to contact us.

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Nick Ratliff

Former electrical engineer & MBA Graduate turned Realtor in 2004

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