Difference Between Appraisal And Evaluation In Real Estate
When it comes to real estate, there are many terms that can be confusing to those who are not familiar with the industry. Two of these terms are appraisal and evaluation. Although both are related to determining the value of a property, they are not the same thing. In this article, we’ll explore the difference between appraisal and evaluation in real estate.
What is an Appraisal?
An appraisal is a professional opinion of a property’s value. It is typically performed by a licensed appraiser who is trained to evaluate various aspects of a property, such as its location, size, condition, and amenities. The purpose of an appraisal is to determine the fair market value of a property, which is the price at which it would sell in a competitive and open market.
An appraisal is often required when a property is being sold, refinanced, or insured. It is also used by lenders to determine how much they can lend on a property. In most cases, the cost of an appraisal is paid for by the person requesting it.
What is an Evaluation?
An evaluation, on the other hand, is a less formal assessment of a property’s value. It is typically conducted by a real estate agent or broker who is familiar with the local market. The purpose of an evaluation is to provide an estimate of a property’s value based on recent sales of similar properties in the area.
An evaluation is often used by homeowners who are considering selling their property, as well as by buyers who are looking to make an offer on a property. It is also used by lenders to get a general idea of a property’s value before approving a loan. Unlike an appraisal, an evaluation is usually provided free of charge.
What are the Differences Between Appraisal and Evaluation?
Although both appraisal and evaluation are used to determine the value of a property, there are several key differences between the two:
- Appraisals are performed by licensed appraisers, while evaluations are conducted by real estate agents or brokers.
- Appraisals are more formal and comprehensive than evaluations, which are more informal and based on recent sales of similar properties.
- Appraisals are often required by lenders, while evaluations are not.
- Appraisals cost money, while evaluations are usually provided free of charge.
Conclusion
Although appraisal and evaluation are both used to determine the value of a property, they are not the same thing. Appraisals are more formal and comprehensive assessments of a property’s value, while evaluations are more informal and based on recent sales of similar properties. If you are buying or selling a property, it is important to understand the difference between the two and to choose the option that is right for you.