A home appraisal is an important task when you’re buying a home through refinancing or mortgage and selling it to a non-all-cash buyer. As the owner of the property, the buyer, or the seller you’ll want to know how the appraisal process works and how your Calgary real estate value is determined through it.
Let’s discuss some important elements of a home appraisal to help you understand it better.
What’s A Home Appraisal?
A home appraisal is an impartial professional opinion about your home’s value. These are commonly done for refinancing transactions and are always used in sale-and-purchase transactions. For a refinancing transaction, the appraisal will ensure that the lender isn’t handing the borrower more than the value of the property. Conversely, for the sale-and-purchase transaction, the appraisal determines whether the contractor’s price is aligns with the location, condition, and features of the property.
A lender can ensure that the homeowners aren’t overborrowing for their property as the home will serve as collateral for the mortgage. What’s more, if the borrower defaults on the mortgage payment the lender can sell the property to get the money that was lent. A home appraisal also helps the bank protect itself against lending more than what it’ll be able to recover in any worst-case situation.
How Value Is Determined with The Appraisal Process
The appraisal process can cost around $300-$600 and it's a normal part of the closing costs of the transaction. Various factors can impact the value of a property. These include similarly valued properties in the area, the location of the neighbourhood, and the proximity of public transit and amenities.
Other than that, home amenities such as the number of bathrooms, bedrooms, quality of appliances, fixtures utilities are also included in the appraisal value. Market trends can affect the value of your home.
When Does the Appraisal Process Take Place?
Home appraisals take place after the buyer and seller agree on a property price and the agreement is signed. After the details of the agreement have been finalized the lender sends an appraiser for determining the value of the property.
The seller can also choose to get an appraisal before the buyers can approach them for a pre-listing appraisal. If this happens, the appraisal will be done before any negotiation and any chance of a low appraisal is eliminated.
While appraisals are important to determine the value of a property, it’s also important that you purchase or sell a property through certified agents. This will ensure that you make the most out of your property sale or purchase.
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