What is an Appraisal?
You have likely heard about appraisals, but do you really know what they entail and how they work? Well, we are here to set the record straight. An appraisal is the act of assessing something. If you want an expert estimate of the value of an item, you would request an appraisal.
Most often, you hear about appraisals in relation to real estate. A standard part of the mortgage process is getting a property appraisal, because a bank will give a homeowner a loan based on the appraised value of the property he or she wants to buy. Plus, when you use your home as collateral to secure a loan, the lender will want an appraisal in order to make sure the loan is backed by the value of the property.
If you are filing an insurance claim for compensation for damage or destruction of the insured property, a written appraisal is required. In general, an appraisal is a key component whenever real estate is bought, sold, insured, or mortgaged. It is essential to know exactly how much a property is worth before taking any further action.
Real Estate, Personal Assets
Since an appraisal is meant to be a value estimation based on facts, it is important to make sure a trained professional is conducting the assessment. Appraisals should not be confused with building inspections, because an appraisal does not report on the complete operation or quality of the property. Instead, an appraisal is a written report designed to provide an unbiased opinion on the quality, condition, and estimated market value of a specific piece of real estate. A market analysis of recent sales prices for similar properties in the area will also play a role in a property's appraised value.
It is important to note that appraisals are not only limited to the realm of real estate. Many people request a used car appraisal in order to get the most accurate price for their current car. Plus, if you are in the market for a new car, an appraisal can help you determine whether you are being quoted a fair price. Most of the time, a car appraisal will be based on the vehicle's year, make, model, mileage, and style (often referred to as trim). Any interior or exterior damage to your car will also be considered. Lastly, the written appraisal will take into account your vehicle's history report, as well as the current national sales trends and auction data for your specific car.
What you can do Before an Official Appraisal
Prior to getting an official appraisal, many people use Kelley Blue Book (KBB) to get a ballpark figure regarding the value of their vehicle. Consumers can go to KBB's website to check the value of their car. Keep in mind that the information you get online is not entirely accurate, because a complete appraisal includes an in-person examination and test drive of your vehicle by an experienced appraiser.
It is helpful to get an appraisal if you are interested in buying a new car, selling your current vehicle, or using your car as collateral for a short term loan. For example, an auto equity loan online is a loan based on car value, so an appraisal is used to determine how much an individual can borrow. Not surprisingly, newer cars with low mileage and a lot of extra features will command a higher price than older vehicles with a lot of wear and tear.
In general, whether you're talking about real estate or automobiles, an appraisal is a helpful way to know the true value of an item you own or plan to own. If you want to know how much a specific asset is really worth, an appraisal is a great way to get an expert estimate.