While an appraiser may spend 20 to 30 minutes walking through a property, home inspectors spend hours, peering under the surface to determine the exact condition of every structure and system.Īppraisers then return to their office and pull up the property’s public records, including the official square footage, land area, assessed value, and sales history. Are there any structural issues? How recent are the finishes and appliances, particularly in the kitchen and bathrooms? How modern are the mechanical systems? Does the property need any repairs?ĭon’t confuse an appraiser’s walk-through with a home inspection however. While walking through the property, they inspect its condition. They map out the floor plan along with approximated measurements of each room’s size and the property’s square footage. Critically, they also list the sale date for each - the more recent, the better they reflect the current market value.įor government mortgages such as FHA loans and VA loans, appraisers must also include certain red flag features such as peeling paint or stairwells missing handrails.Īppraisers visit the property and photograph the interior, exterior, and any land the building sits on. Appraisers include photos of these, along with a summary of how well they match your home. The report goes on to showcase the comparable property sales nearby that the appraiser used to determine the home’s value. They also include photographs of the interior and exterior, along with rough floor plans. The appraisal report lists the estimated value of a home, but just as importantly, it provides the reasoning and evidence for how the appraiser reached that valuation.Īppraisals detail the size, style, layout, location, amenities, age, and condition of a property. But appraisers almost never use these approaches for standard residential homes. Or appraisers could theoretically use the cost approach, calculating the replacement cost of building a new home. If your house needs updates and repairs, they adjust the estimated value accordingly.įor income properties, such as multifamily apartment buildings, appraisers sometimes use the income approach to calculate a property’s valuation based on its revenue potential, rather than the sales comparison approach. The finishing details in the home (such as stone countertops, hardwood floors, and lighting fixtures)Īppraisers compare all of these factors against other recently sold homes.The quality of the basement (whether it’s finished or unfinished).Amenities such as fireplaces or hot tubs.The number of bedrooms, bathrooms, and rooms.The appraiser considers factors including: Likewise, a house with similar square footage, architectural style, and land area offers a better comp than vastly different houses. A property that sold on the same block offers a better comp than one six streets over. So appraisers find the best comps they can, balancing proximity, recency, and similarity. As you can imagine, that almost never happens. The appraiser looks at what similar homes nearby have sold for recently to determine the likely value of your home.Ī perfect comparable sale or “comp” would be an identical home in the same condition, located right next door, and that sold yesterday. The most common of these, used almost exclusively among residential homes, is the comparable sales approach. Real estate appraisers use one of three approaches to determine a property’s fair market value. The real world is a messy place, after all. They then write up a home appraisal report and submit it to their client: usually the lender, but you can hire an appraiser yourself for other needs as well.īecause homes are worth whatever a buyer is willing to pay for them, think of appraised values as estimates. Home appraisers inspect the property and research the neighborhood to determine the home’s market value. The better you understand the process, the less likely you are to get thrown off by a nasty surprise. Applying for a mortgage? Keep your stress ball handy.Īside from collecting your income and asset documentation and pulling your credit report - and a dozen other data points - lenders also require an appraisal of the property you want to buy or refinance.
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