What Is a Home Appraisal?

A home appraisal is a procedure where a certified appraiser meticulously examines a residential property to estimate its market value under fair conditions. In evaluating the worth of a single-family home, our appraisers gather necessary property data, which they feed into the Uniform Residential Appraisal Report (URAR) by Fannie Mae. This guides them in formulating a substantial-value opinion.

The appraisal process essentially involves forming a value judgment reinforced by pertinent market data. When generating an appraisal, the appraiser commits to adhering to practices accepted by the appraisal profession and the respective state and federal regulating authorities. This implies that the relevant market data mainly influence an appraiser’s investigation and final outcomes.

Why get an Appraisal?

Appraisals could be required for numerous reasons, including securing loans, calculating taxes, handling estates, and resolving divorces, among other circumstances.

Who is the Appraiser’s Client?

The client is the individual or organization that engages the appraiser, irrespective of who finalizes the payment for the appraiser’s services. The appraiser owes a duty of confidentiality to the client only. In the context of a lending appraisal, the client is typically the bank or lending institution. However, for other types of appraisals such as tax-related, estate, divorce, or any other private appraisals, the homeowner, attorney, or another involved party may assume the role of the appraiser’s client. Bottomline, The client is the person or company who hires the appraiser, regardless of who ends up paying the appraiser.

Can I Talk to the Appraiser?

Given the appraiser’s obligation of confidentiality to the client, they are restricted from sharing the findings or conclusions of the appraisal with anyone aside from the client. That said, if you are not the client, you can still have a conversation with the appraiser about general aspects of the appraisal process and the property’s physical features. For instance, in a lending assignment, if you have questions about the final appraisal value but are not the client (like a borrower or agent), the appraiser can provide general information and then redirect any specific queries or concerns about the value to your loan officer.

What is Market Value?

A diverse range of property value types exist, from market value and liquidation value to fair market value, among others. In the case of lending assignments, it’s the appraiser’s job to ascertain the market value. Federal regulations govern this value and essentially involve assessing what a typical buyer would reasonably pay to a typical seller in an open-market scenario.

To determine the market value, an appraiser must leverage market data and factor in considerations like the property’s physical state, its location, and any other relevant elements that potential buyers and sellers would typically weigh in their decision-making process.

What Happens When the Appraiser Arrives at the Property?

An appraiser will visit the home,  visually inspect the interior and exterior of the property.  The appraiser will start their inspection outside the home by taking front, street, and rear photos, followed by measurements of the property’s exterior.  Once they have taken exterior photos, exterior measurements and made any notes needed regarding the exterior, they will begin the interior part of their inspection.  Once inside the property, the appraiser will measure each room take photos of each room, and for some loan types, they are required to test your faucets, check the flushing of all toilets, etc.  An appraiser will also consider the size of the plot of land and note the number of bedrooms and bathrooms the property has.  A typical appraisal inspection will take a little under an hour or longer, depending on the size of the home.  

What are Appraisers Looking For?

Appraisers have strict guidelines they must use when evaluating a property.  Generally, appraisers will examine the location of the property, size of the property, which includes the square footage in addition to the acreage of the overall plot of land, physical condition, which includes observable features such as foundation, walls, floors, basements, attics, crawl spaces and the material used in building them.  The appraiser may take note of general maintenance flaws such as broken door handles or leaky faucets.  Our appraisers do not consider your décor or furniture when inspecting the property.

How do you Prepare for an Appraisal?

There are many things that property owners can do to prepare for the appraisal such as; make a list of all past home improvements and repairs to give to the appraiser, address any minor repairs such as chipped paint or stained flooring, clean and declutter so the appraiser can see the condition of the property clearly as well show that your home is well kept, tidy up the exterior of the property which includes landscaping, any damage to gutters or garage doors, etc.

What Steps Does An Appraiser Follow?

Initially, the appraiser collects data pertaining to the property under assessment, concentrating on attributes like dwelling size, unique features, condition, construction materials, vehicle accommodation, location, land size, and any other value-determining factors. This investigation could require a physical visit to the property.

Appraisers might seek your insights regarding the property, including details of any notable features, modifications or renovations, rental history, or any other specifics. You are encouraged to furnish the appraiser with any information or documents that you deem relevant.

The appraiser will then critique market activity (i.e., sales, listings, market transitions, etc.) and your property’s position within that market.

Following this, the appraiser will employ one or more of the three primary valuation methods.

All research conducted, analyses performed, valuation approaches and ultimate conclusions drawn by the appraiser are rooted in market data.

What Happens After the Appraisal Inspection?

After the appraisal inspection process, the appraiser will use all the data they have obtained to provide an in-depth analysis and conclusions about the opinion of value based on their research and observations.  Once complete, the appraiser will send a copy of the appraisal to their client electronically.

Who Pays for the Appraisal?

Our client pays us for the appraisal; our client is the person who engages us for service.  In most lending cases, the lender will require the buyer to pay them directly for the appraisal or have the fee paid at closing, and they then pay us.

What Are the Approaches to the Value?

The appraisal profession and state and federal regulatory bodies recognize three principal approaches to value, which are the preferred methods used by appraisers to arrive at a market-endorsed value conclusion.

In the Sales Comparison Approach, the appraiser identifies and weighs similar properties that have been sold recently as compared to the property under assessment to determine the value the market attributes to such a property. These are commonly deemed as “substitute” properties representing what buyers are willing to pay for your property. Since no two properties are identical, the appraiser may need to make “adjustments” to the comparable sales. To illustrate, should a comparative sale have a three-car garage compared to the two-car garage of the subject property, the appraiser would likely make a downward adjustment to the comparative sale to accurately represent the market’s view of a property with a two-car garage.

Under the Cost Approach, the appraiser evaluates the cost of the land coupled with the cost of constructing the house to establish an estimated value. However, in the case of properties that aren’t new, the appraiser must account for the property’s depreciation to denote its present (not new) value. The appraiser will also factor in the location and other significant aspects influencing the property’s value.

In the Income Approach, the appraiser determines rental rates applicable to the subject property, examines sales of comparable rental properties, and then employs the market’s rent rates and sales prices to estimate the property’s market value.

These three central approaches to valuation necessitate the appraiser to scrutinize market data, ensuring that the final value conclusion is deeply rooted in market factors.

How do I Order an Appraisal?

To order an appraisal, all you need to do is complete our appraisal request form below, and we will contact you for scheduling.

Want to download the “WHAT IS AN APPRAISAL” brochure?