Purchasing a house is an important decision and consequently a reason for a major change in your life. You see value in your house not only as a financial asset but also as an emotional attachment. Therefore you need to make sure that when you buy the house you do so at fair value.

It is, for this reason, that homebuyers gather information about the processes and procedures involved in property sale transactions and take efforts to comply with the essential requirements. Be it researching on the prevailing real estate prices in the market to getting a prospective house appraised for its real value, homebuyers take every step carefully towards the goal of purchasing their very own house.

It is, for this reason, that the home appraisal process is very important where the value of the property assessed by professionals can help buyers make the right decisions about a property purchase. This article seeks to highlight some important facts that a buyer needs to keep in mind when buying a house.

[lwptoc numerationSuffix=”dot” title=”Table of Contents” width=”full” titleFontSize=”16px” itemsFontSize=”16px” colorScheme=”light”]

What is the most accurate site for home values?

Nowadays, it has grown easier for homebuyers to find out the prevailing real estate rates and home values using the internet. This is because of property websites that serve as online platforms or the buying and selling of property.

  • Sites like 99Acres, MagicBricks, QuikrHomes, OLXHomes, etc. serve as “single stop and shop” platforms for buyers to purchase property and facilitate the evaluation and comparison of real estate values.
  • From a long list of properties available in several cities, buyers are presented with options that help them make an informed decision.
  • Even newspapers like Times of India, the Hindu, Hindustan Times, etc. have gone online and have exclusive supplements dedicated to real estate news articles and area-wise property rates.
  • Real estate values are subject to change due to prevailing market conditions but sites like 99Acres, MagicBricks, etc. serve as a good and reliable source of home value appraisal.

What do home appraisers look for?

Home appraisers are professionals who are employed to assess and appraise the value of a prospective residential property to help buyers make an informed decision regarding that property. They look for the following things:

  1. They inspect the property and try to determine its condition and the state it is in. Property in prime shape is worth more than a property that is not in a suitable shape.
  2. Home appraisers survey the locality and the access to available facilities like shops, schools, hospitals etc.
  3. Home appraisers check the features of the house like the number of bedrooms, bathrooms, kitchen, parking space, swimming pool, etc. They also check what materials were used to make these rooms.
  4. They confirm whether the description of the house matches with that stated in the title deed or other property papers.
  5. They may also check for defects in the house like a pest problem that may lower the value of the house
  6. They check if the house is built according to building norms and does not violate any norms as such. Terms like Floor Area Ratio (FAR) or Floor Space Index (FSI), ground coverage (as in how much land does the building cover), height restrictions, etc. feature in their report.
  7. They scrutinize the upkeep of the house and determine how maintained it is.

Is a low appraisal good for buyers?

 A low appraisal means that the appraised value of the house is low as compared to the asking price of the home seller.

  • This puts the buyer at a better bargaining position as compared to the seller because then the buyer can negotiate with the seller to get the asking price reduced.
  • It saves a buyer from making a bad decision about a property that seems to have value in the face of it but in reality will not yield the desired value.
  • It is an indication that the high asking price of the seller is not justified and could justify the buyer’s decision of searching for another property.

However, the downside of a low appraisal is that even if the buyer receives an appraised value that is lower than the asking price, the seller may not accept this appraisal. The market has plenty of buyers but fewer sellers which provide sellers with the advantage to move onto the next buyer. Thus, it may very well be that the buyer may settle for the asking price instead of risking the loss of a prospective house. Also, usually, lenders do not lend money over the value of appraisal and this could leave buyers in a very vulnerable position when sandwiched between the seller and lender.

Can you sell your home for more than appraisal?

Yes, a seller can sell the residential property for more than the appraised value.

  • In a property market, there are far more buyers needful of a house than sellers who need to sell the property. With this imbalance in play, a seller is in a better position to move onto the next buyer if a homebuyer tries to negotiate the asking price down to the appraised value.
  • A needy homebuyer will not risk losing a prospective house when the property market is too saturated. Such a buyer will find his or her position weakened in price negotiations. As such, the buyer will part with money to acquire a house.
  • Home appraisals may also be prone to human error which renders the appraised value unusually low. On discovery of this fact, a home buyer and seller may agree on the asking price for the residential property on sale.

The factors that affect home value are dependent on both internal and external factors:

  1. The house’s age: This is an important factor for the older the house is, the lower is its value and greater the amount of repairs.
  2. Location: The place where the house plays a great role in determining its value. Houses in business or commercial centres are more valuable than houses located in ordinary residential neighbourhoods.
  3. History of the place: If the house is old or has been infested by rodents or hit by flood or fire, these events are important and buyers need to be informed about these incidents.
  4. Parking space: With the number of families who own vehicles growing in India, parking space requirements have increased in residential areas. Thus, the presence or lack of parking facilities also decides the value of a house.
  5. Distance from commercial hubs: Proximity to commercial and industrial hubs raises the value of the real estate.

If a seller wants to get a better value on appraisal then:

  1. It is time to study previous appraisals and remove issues that lowered your house’s value.
  2. Prepare your house for potential homebuyer’s visit. Get it cleaned and clutter-free to make a good impression on potential buyers.
  3. Conduct minor repairs like fixing locks, filling cracks, touching up with paint, etc.
  4. Get documents of your property that display the most recent sale value, verifies the property size and include the land survey.

Conclusion

Assessing the real value of the residential property is an important part of the transaction and affects both parties. By appraising the value of the property, a buyer is also made aware of other things like access to public and private facilities external to the house and the internal condition and features of the house. The appraised value of the house also strengthens or weakens the position of the buyer and seller accordingly when it comes to negotiations over price and payment.

A home appraisal is significant but following it is voluntary. It is upon the buyer ultimately to accept the appraisal result or reject it. Home appraisals may not always yield correct and accurate results and are fallible due to human error. Thus, you may place your trust in this process, but you have to exercise caution when it comes to using the results.