The purpose of an appraisal is to make sure that an independent, non-interested third party verifies the value of the home. Appraisals are meant to be a realistic and unbiased determination of the value of a home if it were to sell in the current market, in its current condition. Appraisers are governed by rules intended to standardize the subjective process of determining a home's value. Some of the key factors appraisers look at are location, square footage, bedroom count, bathroom count, style of home, condition of property and amenities. Appraisers are asked to look only at comparable sales within a certain distance, usually within a one mile radius, and within a specified recent period of time period, usually within the past 6 months. Appraisers also look at market conditions, such as how long it takes for homes to sell and if the values are increasing, decreasing or staying steady.
Listing prices on the other hand are set by the Realtor and the Seller. Listing prices and the sales price are not the same. Homes rarely sell for full listing/asking price. Therefore, the listing price is not the same as the home's value.
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One of the most critical parts of getting a mortgage is the appraisal. The purpose of an appraisal is to confirm the home value for you and the lender. An...
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