Understanding home appraisals, broker's opinions and home inspections

Posted by  on Mar 16, 2012

Knowing which option to choose for determining your home's value or its current condition may seem confusing. Here's an explanation of inspection and valuation services appraisers, real estate brokers and home inspectors provide for their clients, and how the information can best be used by current and prospective homeowners.

  • Residential real estate appraisal: Mortgage lenders use residential real estate appraisals to determine home values before approving mortgages against them. Appraisers are licensed and typically use standard forms; this ensures uniformity and makes them easier to understand. Real estate appraisals generally cost $400 to $500. They compare the house's age, size, condition, to similar properties nearby, then calculate its value.
    Appraisals include diagrams and photos of the home and surrounding property and descriptions of two to three comparable properties recently sold in the same area as the subject property's location. Appraisers affiliated with professional organizations including the American Society of Appraisers (ASA) or National Association of Real Estate Appraisers (NAREA) honor their organization's code of ethics and participate in ongoing training.
  • Broker's opinion of value: Real estate brokers can provide written opinions of property value. Brokers' opinions may be used for requesting a mortgage modification or short sale. A broker's opinion is also useful when deciding to sell or keep your home, and for determining its listing price. Mortgage brokers and lenders do not accept broker's opinions in place of an appraisal when approving home purchases or mortgage refinancing.
  • Home inspections: A professional home inspection should pinpoint structural problems or other issues that influence your decision to buy a home. Real estate agents typically write purchase offers contingent upon the outcome of a professional home inspection. Home inspectors may be licensed by your state or certified by a professional association such as the American Society of Home Inspectors (ASHI).

Tips for a successful home inspection, valuation or appraisal

  1. Real estate professionals can refer you to home inspectors and provide opinions of value; mortgage lenders use in-house or independent appraisers for determining home value for mortgage and refinance loans.
  2. Providing full access to your home and property facilitates thorough and accurate results. Remove pets and hazards from your property and advise the inspector of potential safety hazards such as bad flooring or crumbling steps.
  3. Allow plenty of time for appraisers and inspectors to complete their work to prevent oversights.

The person inspecting your home should provide professional and objective service. Don't attempt to influence the appraiser or inspector's opinion of your home.






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