Find Out What You Need to Know to Get Your Fire-Damaged House Properly Appraised …
If you are planning on selling a fire damaged house, you are going to need to have it appraised. The truth is if you are planning on selling your fire-damaged house, a professional appraisal is one of the best investments you can make.
The appraisal will let you know how much your home is worth and will save you from losing money by undervaluing it or by setting the price too high and delaying or preventing its sale.
This is Particularly Important if You Are Doing “For Sale By Owner”
If you plan on selling your fire-damaged house on your own, the easiest way to establish its value is to have a professional appraisal done.
An appraiser provides you with a complete analysis of the estimated value of your home. Factors such as condition, proximity to schools and services and overall neighborhood values all are taken into account.
When it comes to an appraiser determining the value of your home there are three general approaches: the cost (or replacement) approach, the comparison approach and the income approach.
In the cost/replacement approach, a determination is made as to what the cost would be to replace (rebuild) your home in today’s market.
In the comparison approach, the appraiser determines what comparable properties have sold for in the last six months to one year.
This approach directly compares your fire-damaged house to other properties, adding value for special items that your house has, or deducting value for items that your house lacks (in relation to the comparables).
Unless your property is commercial or a rental property, the income approach does not apply.
Setting the Price on Your Home
Along with location and condition, the price of a house is a major reason why it does or does not sell quickly.
Although the price should not be dealt with lightly, some sellers have a tendency to emphasize it too much, ignoring the home’s condition and ending up with a house that is overpriced for its current condition and the overall market.
You have to keep in mind that a fire damaged house is going to be worth less than similar houses that have not suffered fire damage. This applies no matter how the fire damage in your home has been repaired.
Even if you were to find an unaware buyer who is willing to pay the high price you set, when the buyer applies for a mortgage, chances are very good that the lender’s appraisal will force the price back down to market value.
It’s Important to Get the Price Right the First Time
That’s why you need a high quality appraisal that allows you to set an accurate sell price for your home.
Now let’s answer some of the most commonly asked questions about appraisals.
Frequently Asked Questions
Are real estate appraisals necessary?
Unquestionably, the professional opinion of an appraiser, backed by extensive training and knowledge, influences the decisions of people who own, manage, sell, purchase, invest in, and lend money on the security of real estate. And because the appraiser is trained to be an impartial third party in the lending process, this professional serves as a vital “check in the system,” protecting real estate buyers from overpaying for property as well as lenders from over lending to buyers.
Why should I obtain a home appraisal?
There are many reasons why you may need a home appraisal, including to:
- Determine a reasonable price when selling your home
- Provide a negotiating tool when purchasing real estate
- Obtain a loan
- Contest high property taxes
- Lower your tax burden
- Establish the replacement cost of insurance
- Settle an estate
- And many more
What qualifies someone to be a real estate appraiser?
In many states appraisers must be, at a minimum, state licensed or state certified. They also typically need to have fulfilled rigorous education and experience requirements. They must also adhere to strict industry standards and a professional code of ethics as promulgated by the Appraisal Foundation.
Who do appraisers work for?
Appraisers provide opinions in litigation cases, tax matters and investment decisions but they are usually employed by lenders to estimate the value of real estate involved in a loan transaction.
In general, how long does an appraisal take?
The physical inspection of the real property being appraised can take from approximately fifteen minutes to several hours, depending upon the size and complexity involved.
After the initial inspection of the property the appraiser spends time touring through the neighborhood or area.
During the tour, they search for comparable sales (other properties that are similar to the property being appraised) that have sold within the last year or so.
The appraiser finishes the report at his office after completing the field work. The report can be a short form report, which is typically fewer than ten pages. The report can also be a long narrative report, which can sometimes exceed a hundred pages.
A short form report usually takes between three to six hours to complete. A narrative report can take weeks or sometimes even months, depending upon the complexity of the assignment.
What is the difference between a home inspection and an appraisal?
A home inspection is a third-party evaluation of the accessible structure and mechanical systems of a house, from the roof to the foundation.
The standard home inspector’s report includes an evaluation of the condition of the home’s:
- Heating system
- Central air conditioning system (temperature permitting)
- Interior plumbing and electrical systems;
- The roof, attic, and visible insulation
- Walls, ceilings, floors, windows and doors
- Foundation, basement, and visible structure.
An appraisal offers an expert’s opinion as to the estimated market value of a home.
Homes damaged by fire most likely at some point need both an inspection and an appraisal.
Want to avoid the repair process and appraisal?
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