• Overview
An appraisal is a professional assessment of a property's value by an independent, licensed appraiser to determine the market value. Whether you are buying a home, refinancing a mortgage, settling a legal issue, appealing property taxes or just need to know the current value of a property, the appraisal will provide a home's true property value. An appraisal will determine the market value of your home and give you a solid backing on which you can make the most of your real estate investment.
• Online Estimate, CMA or Appraisal
Don't confuse an online estimate or comparative market analysis (CMA) with an appraisal. On-line computer generated valuation providers such as zillow.com offer an estimate of the value of a property. The accuracy is limited to the basic comparable data available that may be incomplete or incorrect; also, the program cannot physically inspect a property to verify the condition. Real estate agents use CMAs to help home sellers determine a realistic asking price. Experienced agents often come very close to an appraisal price with a CMA, but an appraiser's report is much more detailed- and is the only valuation report a bank or attorney will consider when securing a loan or settling an estate.
• Impartial and unbiased
An appraiser works independently of home owners, mortgage companies and lenders to determine the value of a property. If you're buying the home and having it financed, your lender will likely choose the appraiser. That's fine, as long as the appraiser has no direct connection to the company. The appraiser should not be influenced by any party. Check www.appraiserline.com to search all the appraisers near you.
• Licensure
Appraisers are licensed by state standards. Appraisers must acquire many hours of education, pass a licensing exam, acquire hours of appraisal experience and then pass another test before they are licensed to work on any type of real estate. Whoever does the appraisal on your property should to be licensed. Check an appraiser's license here.
• What you will see in the appraisal report
Appraisals are very detailed reports, but here are a few things they include:
 • Details about the subject property, along with side-by-side comparisons of at least three similar properties.
 • An assessment of the overall real estate market in the area
 • Statements about issues or features the appraiser finds that contribute or impact the property's value, such as functional issues for example, a 5     bedroom 1 bathroom house, or external issues like being near heavy road or train noise.
 • What type of area the home is in (a PUD development, condominium project, duplex, acreage, etc.).
 • Notations about seriously flawed characteristics, such as a damaged foundation.
• Appraisals vs. Home Inspections
Appraisers make notations about obvious problems they see, but they are not home inspectors. They do not test appliances, look at the roof, check the chimney or do any other typical home inspection tasks. Never count on an appraisal to help you determine if the home is in good condition. An inspection by a trained home inspector will provide further important protections for you if you are purchasing a property by informing you with details of any needed major repairs. Find a local home inspector here.
• Approaches to Value
An appraiser's primary task is to develop an opinion of the market value of your property. There are two common appraisal methods used for residential properties. First, there's the replacement cost of the home, which is the cost to rebuild the home to its current condition. Second is the sales comparison method, where the appraiser compares the home to several recently sold homes in the area of similar size and quality and produces a value for your home. This process happens after the walk through inspection of the home.



Sales Comparison Approach

The appraiser estimates a subject property's market value by comparing it to similar properties that have sold in the area. The properties used are called comparables, or comps. No two properties are exactly alike, so the appraiser must compare the comps to the subject property, making positive or negative adjustments to the comps in order to make their features more in-line with the subject property's. The result is a figure that shows what each comp would have sold for if it had the same features as the subject.



Cost Approach

The cost approach is most useful for new properties, where the costs to build are known. The appraiser estimates how much it would cost to replace the structure if it were destroyed.
• Access to Home Information
You can expect the appraiser to ask for information about your property. This information can help the appraiser determine the best approximate value of the property. Provide documentation such as invoices from recent remodeling projects or upgrades. This information can also include surveys and blueprints, list of recent home improvements, the home's square footage, types and number of rooms and any homeowner's association dues you might have to pay. The appraiser may also ask to see your utility bills, costs for taxes and insurance, and even a copy of your tax bill.
• Documenting the Home
The appraiser is required to record certain things during the walk-through. The appraiser will photograph the entire outside of the home, and the main living areas in the interior. The appraiser will measure out all parts of the home and provide a sketch of the home's interior layout. The appraiser will note which rooms are where and any features that contribute to the value.
• Copy of Report
If you ordered the appraisal for the property and you are named as the intended user, you should receive a copy of the appraisal. If your lender ordered the appraisal, you have the right to ask to see a copy of the report before you close on the loan. But you'll need to ask your lender for a copy of the appraisal. This could be important information if your appraisal came up with a home value that was less than the amount you are trying to finance. You have the right to contest the appraisal, and a copy of the appraisal may allow you the information you need to wage a successful appeal.

Have a question or opinion about appraisals? Need some help? Contact Us with any questions or feedback you may have.