If you own property, it’s essential that you plan for the future, as in, answering the tough question of what will happen to your assets when you die? You can (and should) have a will in place that will spell out your wishes and how assets should be distributed after your death.
Home appraisals and assessments: Are they necessary?
As a buyer, seller, or homeowner you’ve heard about home appraisals and assessments used in the homebuying process. Are they both necessary?
Home appraisals and assessments are an essential part of determining the value of a home. Although they sound similar, they are not interchangeable. Here are a few distinctions and how they can benefit you:
Home assessments determine your property taxes and more
Assessments are based on factors like sales comparison data and cost method. Municipalities then use this information to determine what homeowners will pay in property taxes. These taxes in turn fund public works like schools, safety, parks, and more.
Assessors typically do not go into the home to see how many rooms there are, its amenities, additional structures, or other interior factors. As such, an assessment may not reflect a property’s true value.
That’s where appraisals come into play.
Home appraisals determine fair market value
When buying or selling a home, you’ll want to get a property appraisal conducted by a state-licensed appraiser. This determines a home’s fair market price and it ensures that:
- As a buyer, you aren’t overpaying
- As a seller, you’re setting a fair price
In fact, lenders like Guild Mortgage require appraisals so they have a detailed understanding of the property being sold before approving a loan.
Because of what an appraisal is used for, the process is very thorough. The appraiser will look at the home and take into consideration:
- Number of bedrooms
- Architectural style
- Square footage
- Construction materials used in installations (e.g., marble countertops, hardwood floors, etc)
- Window composition
- Age of house
- Roofing material
- When the roof was last installed or updated
- Insulation type
- Basement and whether it’s finished
- Foundation (e.g., Concrete slab, crawl space, etc.)
Appraisals can often be used to help lower your property taxes! If your home was assessed for a higher value than what it was appraised for, you can appeal.
Your home’s appraised value reflects what you might expect to get if you put it up for sale. Its tax-assessed value is used to determine how much you can anticipate paying each year in property taxes. As always, make sure your property is assessed and appraised by a professional. At SmartMortgage.com, your loan officer will order your appraisal for you as part of the mortgage service. If you have any questions about where this fits into the homebuying process and how to prepare for it, don’t hesitate to ask.