{"id":6691,"date":"2023-07-19T18:07:02","date_gmt":"2023-07-19T22:07:02","guid":{"rendered":"https:\/\/talk.talktotucker.com\/?p=6691"},"modified":"2023-07-19T18:07:05","modified_gmt":"2023-07-19T22:07:05","slug":"whats-the-difference-between-a-home-valuation-and-a-home-appraisal","status":"publish","type":"post","link":"https:\/\/talk.talktotucker.com\/buying-and-selling\/whats-the-difference-between-a-home-valuation-and-a-home-appraisal\/","title":{"rendered":"What\u2019s the Difference Between a Home Valuation and a Home Appraisal?"},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 20px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p><\/p>\n\n\n\n<p>When you\u2019re getting a house ready to put it on the market, it doesn\u2019t take long to realize that you have to pick up a whole new vocabulary that\u2019s very specific to real estate.<\/p>\n\n\n\n<p>There are two terms, in particular, that often cause homeowners a lot of confusion: Home \u201cvaluations\u201d and home \u201cappraisals.\u201d While both terms talk about what any given home is worth, home valuations and home appraisals have distinctive purposes, methodologies and implications. Let\u2019s talk about the differences between them so that you can understand more about what each involves.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2><strong>A Home Valuation Is an Estimate of Its Market Value<\/strong><\/h2>\n\n\n\n<p>With real estate prices in constant fluctuation, it can be hard for a homeowner to tell what price they should put on their listing if they decide to sell. If they price their property too low, they could lose money (especially if a prospective buyer realizes they\u2019re getting a steal). If they price the property too high, they could watch their listing stagnate.<\/p>\n\n\n\n<p>That\u2019s where a home valuation is useful.&nbsp;<\/p>\n\n\n\n<p>A home valuation is an estimate of the property\u2019s worth on the open market. Typically, home valuations are done by a real estate professional as a prelude to listing a property for sale, as this helps the homeowner contextualize their home\u2019s position in the current market conditions.&nbsp;<\/p>\n\n\n\n<p>In other words, the valuation of a property doesn\u2019t necessarily set the asking price on a piece of property, but they\u2019re often closely related. For example, it\u2019s not uncommon for a seller who is highly motivated to price their home below its valuation point to attract a quick sale, while others may choose to aim a little above the valuation so they have more room to negotiate the price down.<\/p>\n\n\n\n<p>What goes into a home valuation? This is where the experience and skill of your real estate professional come into play. Some of the elements that are usually factored into a home valuation include:<\/p>\n\n\n\n<ul>\n<li>Whether it\u2019s currently a \u201cbuyer\u2019s market\u201d or a \u201cseller\u2019s market\u201d in your area. Scarcity increases the value of just about anything, so if there are more buyers than sellers right now, you may be able to ask more for your home.<\/li>\n\n\n\n<li>The overall desirability of your home\u2019s location. Different neighborhoods attract different buyers and have different price points. If you live in an area with great schools, a low crime rate and access to plenty of amenities, that can raise the value of your home.<\/li>\n\n\n\n<li>Your home\u2019s overall size, condition and features. What buyers want in a home can change over time, so a lot may depend on how \u201ccurrent\u201d your home seems. Modern updates and renovations, too, including smart home features, <a href=\"https:\/\/www.talktotucker.com\/talk\/home-ownership\/want-to-quickly-increase-a-homes-value-add-an-ev-charger\/\" target=\"_blank\" rel=\"noreferrer noopener\">electric vehicle chargers<\/a> and other up-to-date modifications can help raise your home\u2019s value.<\/li>\n<\/ul>\n\n\n\n<p>Many real estate professionals use \u201ccomps\u201d (comparisons) when they perform a home valuation, i.e., looking at similar homes in the area to see what they\u2019ve sold for within the last several months. These may be more or less useful, however, depending on how stable your local real estate market has become.<br>In addition, a real estate professional may provide several different valuations that are based on the idea that the homeowner can or will make certain changes or upgrades before listing the property for sale.\u00a0 For example, a valuation may rise if a homeowner agrees to repaint their home\u2019s interior or get new landscaping to <a href=\"https:\/\/www.talktotucker.com\/talk\/agents\/5-tips-add-curb-appeal-home\/\">improve the home\u2019s<\/a><a href=\"https:\/\/www.talktotucker.com\/talk\/agents\/5-tips-add-curb-appeal-home\/\" target=\"_blank\" rel=\"noreferrer noopener\"> <\/a><a href=\"https:\/\/www.talktotucker.com\/talk\/agents\/5-tips-add-curb-appeal-home\/\">curb appeal<\/a>.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2><strong>A Home Appraisal Is Done to Protect the Bank\u2019s Investment<\/strong><\/h2>\n\n\n\n<p>Unlike valuations, home appraisals are done on behalf of the buyer\u2019s bank or lender (or when a homeowner wants to refinance) in order to protect the bank\u2019s investment. After all, a lender doesn\u2019t want to put more money into a home than it\u2019s worth because they\u2019d experience a loss if the borrower eventually defaults on the loan.<\/p>\n\n\n\n<p>Home appraisals are typically done by a certified third-party appraiser, which means they don\u2019t work for the lender, the homeowner or the buyer. This helps make sure that the appraisal adheres to a standardized process that follows both the industry guidelines and certain legal requirements and is done without bias.<\/p>\n\n\n\n<p>Typically, an appraiser will do an on-site inspection of the property to carefully evaluate many of the things that were factored into its valuation. However, appraisals usually involve a level of scrutiny that doesn\u2019t happen during a valuation.&nbsp;<\/p>\n\n\n\n<p>If an appraisal comes in at or above the sales price of a home, that\u2019s good \u2013 because a lender is only going to offer a loan based on that figure. If the appraisal comes in too low, you have an \u201c<a href=\"https:\/\/www.forbes.com\/advisor\/mortgages\/real-estate\/appraisal-gap\/\">appraisal gap<\/a>\u201d that can absolutely derail your sale.&nbsp;<\/p>\n\n\n\n<p>While appraisal gaps were uncommon in the past, they were frequently seen just a year ago when home prices were rapidly rising \u2013 and they\u2019re still happening. When there\u2019s an appraisal gap, a buyer has to either try to negotiate a lower price with the seller or come up with the difference between what the bank will lend them and the price of the home on their own.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2><strong>What\u2019s the Bottom Line About Valuations and Appraisals?<\/strong><\/h2>\n\n\n\n<p>While valuations offer valuable insights, they are subjective estimates (and maybe more of an art form) and should not be regarded as precise appraisals. In contrast, home appraisals are detailed and objective assessments of a property&#8217;s value, conducted by a licensed or certified appraiser. Both of them can be important to your home sale journey \u2013 but they may or may not be reflective of each other.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.tuckerrealty.com\/sell\/home-values\/\" target=\"_blank\" rel=\"noreferrer noopener\">Talking to a real estate professional<\/a> can help you better understand the nuances between the two so that you can navigate the sales process with confidence and ease.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When you\u2019re getting a house ready to put it on the market, it doesn\u2019t take long to realize<a class=\"moretag\" href=\"https:\/\/talk.talktotucker.com\/buying-and-selling\/whats-the-difference-between-a-home-valuation-and-a-home-appraisal\/\"> &#8230;<\/a><\/p>\n","protected":false},"author":20,"featured_media":6692,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[7322],"tags":[8920,8913,8914,1225,8921,405,8915,8919,8916,8917,8911],"yst_prominent_words":[706,5711,140,7382,30,8523],"fimg_url":"https:\/\/talk.talktotucker.com\/wp-content\/uploads\/2023\/07\/Whats-the-Difference-Between-a-Home-Valuation-and-a-Home-Appraisal.png","_links":{"self":[{"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/posts\/6691"}],"collection":[{"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/comments?post=6691"}],"version-history":[{"count":0,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/posts\/6691\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/media\/6692"}],"wp:attachment":[{"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/media?parent=6691"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/categories?post=6691"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/tags?post=6691"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/yst_prominent_words?post=6691"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}