How to Estimate the Value of A Home Before AppraisalOne of the primary factors involved in planning for a home purchase mortgage is the price of the home you plan to buy. The price of a given home is determined through an appraisal, and most every home sale involves an appraisal at some point in the process. The appraisal often doesn't come at the beginning of the purchase process, but it needs to come sometime well before the end, as you won't qualify for a loan without this information. In many cases, you'll need an appraisal even to refinance your home. While the only true way to learn the value of a home is to pay for an appraisal, you can often estimate the value of the home yourself by understanding the factors that an appraiser will take into account when reviewing the property. The following factors are typically considered. The value of comparable homes. This is arguably the most important factor that your appraiser will look at. If other homes with similar features in the same area are selling for a specific price, this will strongly influence the value attributed to your home. It should be noted that, in the case of a home purchase, when we say "your home" we're referring to the home you plan to buy. The size of the home. This is another critical factor. All else equal, a small home will appraise for a lower value than a large home. Living space is directly correlated to value in most cases. The region and neighborhood. Neighborhoods with high crime rates cost less, on average, than neighborhoods with clean streets. Areas close to major cities cost more than areas where there are few, if any, amenities or other homes. Sometimes, though, it can be difficult to determine just how the region where the home is located will affect the value. For example, a home that sits beside a freeway may be worth less due to increased noise and pollution, but it may gain value due to close proximity to the same freeway if the job market in the area grows. The amenities included. If the home comes with an in ground pool in the backyard, this special feature will be accounted for by the appraiser. Does the home have an especially large garage? A hot tub? Ocean views? Any of these distinctions may increase the value or price. If you're planning to purchase a home or refinance your current mortgage, you'll need to know the value of the involved property sooner or later. Though your credit score will affect your ability to get a mortgage first and foremost, the value of the home you plan to buy will affect the availability of financing, too. |
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