DIY vs. Professional Appraisals: What’s Best for Valuing Your Property?

When it comes to selling your property or determining its value for other reasons, you might be tempted to take a DIY approach to appraisals.

After all, who wouldn’t want to save a little money?

However, deciding between a DIY appraisal and hiring a professional can impact how accurately your property’s value is determined. Let’s explore the differences, benefits, and drawbacks of both approaches to help you make the best choice.

Understanding Property Appraisals

A property appraisal is an assessment of a property’s market value. This value is important for various reasons, including selling your home, refinancing a mortgage, or settling an estate. Accurate appraisals ensure you’re not underpricing or overpricing your property.

DIY Appraisals: Pros and Cons

Pros:

• Cost Savings

The primary advantage of a DIY appraisal is saving money. You can use online tools and websites to estimate your property’s value without hiring an appraiser. Many online valuation tools are free or cost significantly less than professional services.

• Convenience

DIY appraisals can be done on your own time. You can gather data and analyze it whenever you’re available, without needing to schedule an appointment with a professional.

Cons:

• Accuracy Issues

DIY appraisals rely heavily on online tools and data, which might not be as accurate or up-to-date as professional assessments. According to a 2022 study by the National Association of Realtors (NAR), automated valuation models (AVMs) had an accuracy rate of only 50-60% in predicting home values.

• Lack of Expertise

Without professional training, it’s easy to overlook key factors that affect property value, such as local market trends, property condition, and neighborhood comparisons. This can lead to an inaccurate valuation.

Professional Appraisals: Pros and Cons

Pros:

• Expert Knowledge

Professional appraisers have extensive training and experience. They understand local market conditions, neighborhood trends, and property features that affect value. According to the Appraisal Institute, professionally trained appraisers are typically 90-95% accurate in their valuations.

• Comprehensive Reports

A professional appraisal includes a detailed report that outlines how the value was determined. This report considers factors like recent sales of similar properties, property condition, and market trends, providing a thorough and reliable assessment.

Cons:

• Cost

Professional appraisals can be expensive, with costs typically ranging from $300 to $600, depending on the property size and location. This fee might be a concern if you’re trying to save money.

• Scheduling

Professional appraisers need to visit your property to assess its value, which can be inconvenient and require scheduling flexibility.

Which is Best for You?

The choice between a DIY appraisal and a professional appraisal depends on your needs and circumstances.

For Homeowners Selling Their Property:

If you’re selling your home, a professional appraisal is often the better choice. Accurate pricing is crucial to attract serious buyers and avoid lengthy time on the market.

According to Zillow, homes priced within 1% of their appraised value sell 33% faster than those with price discrepancies. A professional appraisal can provide a realistic valuation and help you set the right price to sell quickly.

For Refinancing a Mortgage:

Lenders typically require a professional appraisal when refinancing a mortgage to ensure the property’s value supports the new loan amount. This is because lenders need a precise valuation to assess risk. DIY appraisals are not accepted by most lenders for this purpose.

For Estate Planning or Legal Matters:

In cases of estate planning or legal disputes, a professional appraisal provides a documented and legally recognized value. This can be crucial for fair distribution of assets or resolving disputes. A certified appraisal report holds more weight in legal situations compared to a DIY valuation.

For Personal Knowledge:

If you simply want a rough estimate of your property’s value for personal knowledge or curiosity, a DIY appraisal might suffice. Online valuation tools can provide a general idea of your property’s worth, which can be useful for budgeting or planning purposes. However, keep in mind that these estimates are less reliable and may not reflect current market conditions accurately.

Making the Decision

The  choice between DIY and professional appraisals should be guided by your specific needs and the importance of accuracy in your situation.

For critical decisions like selling your home or refinancing a mortgage, investing in a professional appraisal is usually the best approach to ensure you get a precise and credible value.

For less formal purposes, DIY methods can offer a cost-effective alternative.

Conclusion

Both DIY and professional appraisals have their place in property valuation. DIY appraisals offer cost savings and convenience but come with accuracy risks and lack the depth of professional assessments.

On the other hand, professional appraisals provide expert analysis and detailed reports, essential for important financial decisions and legal matters.

Just make sure that you understand the strengths and limitations of each approach, you can make an informed choice that best meets your needs and ensures you get a reliable valuation for your property.