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Home Appraisals: What Should You Know?

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Without the home appraisal, your lender will not finance the purchase of a home. Some people underestimate the importance of the appraisal. Others tend to overestimate its value. To get a better understanding about the home appraisal, it is important that you know the truth about it. To help you understand, here are some of the myths about it and the truth.

Buyers Only Have to Pay the Appraisal Price 

Some sellers list their homes at a lower rate than it would fetch from the market because they believe the home appraisal is the most that a buyer might be willing to pay. The truth is, the home appraisal is more about helping your lender than you.

The lender orders the appraisal to learn the value of the property. The lender wants to know that the home is worth at least the amount of the loan. It is based on such factors as the amenities, neighborhood, and size of the home. By contrast, the listing price is based more so on the market.

For instance, if the appraised value of a home is $300,000, but comparable homes in the area have sold for $350,000, the seller can likely fetch the higher price for his or her home.

A Pool Can Increase the Appraised Value

A pool at a home does not necessarily have a positive impact on the appraised value. Some homeowners are surprised to learn that the pool does not increase the value of their homes. Whether it does increase the value depends on several factors, including the location of the home.

In warm climates in which the pool would be used on a regular basis, it could potentially add value to the home's appraised value. However, in cold climates, the fact that it is not used often could mean that having a pool has no impact on the value.

Whether other homes in the area have pools can also have an impact. If every home on the block has one and the home you want to buy does not, it could be a negative on the value. 

Before placing too much value on a home appraisal or underestimating its importance, talk to your real estate agent. He or she can dispel any myths that you might have heard about the appraisal and provide you with accurate information that you can use to decide on the right home for you.