What You Need to Know About Your Home's Appraisal

If you are planning to sell your home or if you wish to apply for a home equity loan, getting your home appraised is a critical step in the process. By determining the value of your home, lenders can better determine how much they are willing to loan to you for an equity loan or home much they are willing to lend to a potential buyer. Nonetheless, many homeowners know little about the appraisal process or what it entails. While you certainly aren't expected to be an expert in home appraisal, it is good to know a few basics before you hire someone to provide a professional appraisal of your home.

Understanding the Appraisal Report

After the appraiser has walked through your home and made all of the necessary assessments, he or she will create an appraisal report. Generally, these reports are about two to three pages long, though it is possible or an appraisal to be more than a hundred pages long as well. Information that is typically included in these reports include:

Details about your home
A description of your neighborhood
Side-by-side comparison information of your home and other similar properties
An evaluation of the real estate market in the area
Information regarding any major problems with the property

By using all of this information, the appraiser is then able to provide an estimated value of the property as well as an estimate of how long it will take to sell the property.

Developing the Appraisal Report

In order to develop the appraisal report, the appraiser will primarily compare your home to the amount that similar homes have recently sold for. It is important to keep in mind that an appraisal is not the same as a home inspection, which is intended to determine whether or no the home is structurally sound. Rather, the appraiser is simply looking to identify any distinguishing characteristics of your home that can help select other recently sold homes that can serve as a point of comparison.

Obtaining an Appraisal Report

If you have recently purchased a home, you can obtain a copy of the appraisal report from your lender. Whether you realized it or not, you paid for an appraisal when you purchased your home and federal law gives you the right to obtain a copy of that report. If you purchased your home more than a year ago, however, you probably should obtain a new appraisal report in order to properly reflect changes in the market as well as any changes you may have made to the home.

Using Your Appraisal Report

Once you receive your appraisal report, you can use it to help improve the value of your home. Focus on any items that gave your home's value a negative adjustment and make any necessary updates or changes. This way, you can increase the value of your home and sell it at a higher price or receive a larger home equity loan if necessary.

About the Author: Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.electronicappraiser.com/, which is a leading provider of on-line home appraisals and offers a nationwide personalized instant informational report about home appraisal. For more information, please visit .
http://www.electronicappraiser.com.

The appraisal industry has changed…..forever!

AVM’s have forever changed the way Wall Street, Lenders and Banking industry use appraisal. You may be asking yourself, what is an AVM and how does it affect the appraisal industry?

AVM is short for "Automated Valuation Model". Appraisers, Wall Street and Lending Institutions all use AVM technology in their analysis of residential property. An AVM is a residential Valuation Report that can be obtained in a matter of seconds. It is a technology driven report. The product of an automated valuation technology analysis, public record data, and computer decision logic combined to provide a logical calculated estimate of a probable selling price of a residential property. An AVM generally uses a combination of two types of evaluation, the running of a hedonic model and a repeat sales index. The results of each are weighed, analyzed and then reported as a final estimate of value based on a requested reasoning date. http://www.electronicappraiser.com/why.cfm

AVM’s have been around since the late 1990’s. For decades, mortgages have been constantly bought and sold in large groups of loans, (pools) by banks, institutional investors and Wall Street. As technology caught up with the demand, there arose a need to rapidly evaluate large groups of residential loans without appraising each property associated with the corresponding loan. This has always been an expensive process that could take several weeks to complete. AVM technology allowed the addresses associated with each loan to be fed into a computer, AVM reasoning would be applied to each property and result in a report of the then current “market” value for each property in a loan pool. The AVM would assist the institutional investor in determining their risk for that pool.

As AVM technology improved, many uses for them evolved. Not only were they being used for large pools, but also for individual loans. Fifteen years ago, a no closing-cost loan was virtually unheard of, with AVM’s they became commonplace. Loans were just too expensive to process, one of the largest costs being that of a traditional appraisal. AVMs allowed lenders to quickly evaluate a property and in many cases determine if a full appraisal were necessary to fund a loan, and could be done inexpensively. This was especially true in “portfolio” loans, loans in which a lender did not intend to sell.

AVM’s give a non-partial analysis, appraisers are constantly being persuaded by real estate brokers and loan agents to hit a certain value. There is no bargaining with an AVM, the computer determines a non-biased value, thus greatly reducing the risk of fraud.

AVM’s are attractive in price, significantly lower than a traditional appraisal. From $25-$50 for individual reports, to a few dollars each if bought in bulk.

AVM’s have not evolved to the point where they are able to replace the appraiser, nor are they suited for every use. For example, they are relatively new to the market in originating first mortgage loans and in a rapidly changing real estate market (up or down), local knowledge is a must. The acceptance and uses of AVMs is constantly expanding, and as it expands the need for a traditional appraisals will continue to diminish.

About the Author: Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisal service. For more information, please visit www.electronicappraiser.com.