What are appraisals for?
Appraisals are an important part of a real estate transaction. They determine the market value of a property based on a specific set of factors such as: comparable property sales, location, size of lot, condition of property, amount of square footage, number of bathrooms and bedrooms and general market climate.
An appraisal is crucial for homebuyers to ensure they aren’t overpaying, for sellers to price their home appropriately and especially for mortgage lenders to ensure the property provides sufficient equity for a loan.
An appraisal is also beneficial in other circumstances.
- For a marital breakdown: to provide the current market value for one spouse to pay out the other for financial separation
- For insurance purposes: to value property for an estate or for replacement value of the home or certain items
- For business or asset valuation assesses the net worth of a business for a sale or tax reporting or legal purposes
- To determine the market rent for renting a property out or a portion of the property out
Please note that the majority of lenders require a full appraisal to be done in a mortgage transaction and it is the responsibility of the borrower to pay for the appraisal.
For more information on the appraisal process, take a look at this explainer video, and book a call if you have any questions.
