But if you're just looking for an informed quote, you can get a free home appraisal through online tools or an experienced local real estate agent. If an appraisal doesn't come out as hot and you end up with a home valuation that is lower than you expected, that can be a major disadvantage for the landlord. One of the best-known online home appraisal tools is Zillow's “Zestimate,” which claims to have a current average error rate of 4.5%. Real estate agents or websites can give you an informed guess about the value, but an appraisal is usually required as official documentation to show that a seller does not overvalue or undervalue a home in an exaggerated way.
While you'll still need an appraisal for most types of loans, the Home Value Estimator is a quick and free way to get an instant estimate that can be used to help you decide what to offer in a new purchase or how much capital you can have for a refinance. Traditionally, to find the valuation of your home, you would have to hire a professional appraiser who would assign you a number based on neighborhood condition and compensation (or comparable sales). Mortgage lenders primarily use home appraisals to approve the loan they are about to grant to someone who wants to buy a home. The existence of the subject property and the accuracy of the valuations are estimated on the basis of the available data and do not constitute a valuation of the subject property and should not be relied on in lieu of underwriting or an appraisal.
There may even be a contingency in the contract that protects you from buying a home for an amount greater than the appraised value. However, appraisals and inspections have some similarities, even taking into account the condition of the home. Unlike an appraiser, the home inspector's goal is to evaluate the home for signs of damage or problems. Online appraisals are also a great tool for those who are new to the housing market and can serve as a starting point for learning about home valuation.
If the valuation turns out to be lower than the seller's price, the buyer could use it to negotiate a reduction by asking the seller to match the appraised price. Mine have been appraised by a professional and they are well below the fair market price of my house. With rare exceptions, mortgage lenders always require appraisals both for the purchase of a home and for when a homeowner refinances a mortgage. An appraiser with that local knowledge would know how to extract compensation from homes only within the same school district, while an AVM could mix the compensations of the two districts, resulting in a biased valuation of their property.
However, if you want to track the value of your home over time, several online home appraisal sites can help you better understand the value of your home.