Inspecting a home

Home Appraisal vs. Opinion of Value

Last year, I wrote an article about the difference between a Comparative Market Analysis (CMA) – commonly promoted as “free home evaluations” – and the less common Opinion of Value. Both are used by sellers to get an idea of what their home is worth in today’s market, but where the CMA provides a pricing range, an Opinion of Value provides you with an actual value based on the real estate agent’s knowledge and research.

The other end of the spectrum for evaluating a home’s worth is the Home Appraisal. This is a far more comprehensive valuation of the home and can only be done by a Certified Appraiser, who is an independent third party to a transaction.

Home appraisals are typically enlisted by the buyers to determine if they are paying a fair price for a home. They are also used by lenders to determine the amount of financing available to the buyer. In some cases, a seller may get a home appraisal if they require a more accurate assessment of value, as is often the case in divorce or estate sales.

Home appraisals are comprehensive evaluations in that they not only consider location, comparable properties and market conditions, they assess the actual property itself. This includes the condition of the home both inside and out, number of rooms, square footage, amenities and more.

The main differences between a Home Appraisal and an Opinion of Value (which also provides a market value number) include:

  • Comprehensive assessment – a qualified home appraiser has specialized training and looks at the finer details of a property, from roof shingles to plumbing to electrical wiring.
  • Used by mortgage lenders – if you need a mortgage or are refinancing, lenders will only rely on a professional appraisal to determine your mortgage amount.
  • Certified – while a CMA or Opinion of Value can be done by any real estate agent, only a trained, licensed appraiser can provide a Home Appraisal.
  • Cost – Home Appraisals cost between $300-$600. Some agents may charge for an Opinion of Value, but CMAs are free.

When buying or selling a home, understanding the fair market value of a property is important, whether it’s ensuring you’re paying a fair price or ensuring you are getting a fair price. At the end of the day however, valuations and appraisals are just a starting point, and a seller will only get what a buyer is willing to pay.

Working with a trusted Realtor® will help ensure you have all the information you need to make the most informed decision possible as both a buyer and a seller.

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