An appraisal is an assessment of market value or "an opinion of value" on a particular piece of property whether it's a residential home, a condominium, commercial property or vacant land. All of those real estate items can be valued by an appraiser, which can assist a prospective buyer in securing a mortgage. An appraisal provides a tangible recommendation on the value of the property for purchase. Appraisals are not only limited to helping someone secure a loan; they also are vital to anyone looking to buy, sell or insure a piece of property or lend money on real estate.

For instance, a prospective homebuyer with an existing property may be looking to secure a mortgage with a bank or lending institution for the purchase of a second property. That institution, in assessing how much to lend that client, would have an appraisal performed as a part of the application process to determine how much should be loaned for the intended purchase. The appraisal is absolutely necessary, since the existing property will be used as collateral on the loan for the new property.

The appraisal is conducted by an appraiser, who visits a home and assesses it looking at size, condition, and maintenance records. The appraiser's report will reflect comparisons of prices of similar properties in the area, to determine the overall value of the subject property. Other comparisons can also be made on square footage, appearances, amenities and the overall condition of the property inclusive of landscaping.

An appraisal ahead of a purchase assists in accurately determining the market value of a home. A prospective buyer can also use the information to make a well-informed decision in crafting an offer based on an independent expert's opinion of the property's value, or to pass on the purchase altogether and continue looking for a more suitable property. Conversely, anyone intending to sell a house should obtain an appraisal before placing the property on the market for sale. In addition to reflecting value, the appraisal might also allay any last minute hiccups in a buyer's appraisal.

Potential delays can stall or kill any sale. Finally, an appraiser's services should also be engaged when securing insurance value for a property. A homeowner who knows the value of the home would stand a better chance in obtaining the insurable value of items should it be destroyed or damaged. It's also a good idea after major renovations to obtain an appraisal and forward a copy on to one's insurance provider.

No one wants to be underinsured in the case of a disaster. The purchase of a home is one of the biggest decisions an individual will take in this life. It involves risks, and performing an appraisal is an important way to reduce the associated risk. This step is a key aspect of doing due diligence, and allows the purchaser to better know the value of the property or land he or she is considering.

Ensure that an appraiser who is licensed by the Bahamas Real Estate Association (BREA) is secured. o William Wong is president of Wong and Associates Realty. He was also a two-term president of The Bahamas Chamber of Commerce and The Bahamas Real Estate Association. Questions or comments can be emailed to william@wongsrealty.com.

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