Appraisals are an important part of every financed real estate transaction. If you own your home and you have a mortgage, an appraisal was done on your house prior to close of escrow. Most buyers, though, aren't at the house when the appraisal is done, so they're really not sure what an appraisal is, or what an appraiser looks for when the inspection is done.

An appraisal is an opinion of value given for a specific property on a specific date. In other words, it's the estimated market value for the house on the day the appraiser inspects the house.

How does an appraiser come up with the value? Great question, and as a Certified Residential Appraiser in the lovely state of California, I'm here to help you understand what it is I really do.

Once I receive an appraisal request from the lender, I pull up the property data that's on file in the public records. I use a data service called RealQuest that pulls information from local county records.

For large counties such as Sacramento, the data is usually up to date and accurate. The information includes property address, APN (Assessor's Parcel Number), square footage of the house and garage shown separately, the number of bedrooms and bathrooms, year the house was built, current owner of record, and last market sale date and price.

There's also supplemental data such as the census tract, legal description and FEMA flood map panel and date, which is also included in the appraisal report, but isn't quite as interesting as the previous stuff.

If the lender has requested a full or limited walk-in appraisal, I contact the borrower (if it's for a refinance), or the agent or seller (if it's for a purchase) to make the appointment for the inspection.

Once I'm at the house, I take photos of the front of the house, rear of the house and street scene. I also measure the house and draw a sketch with dimensions that I input into a custom program that calculates the square footage of the house. I take notes on outside amenities like covered patios or decks, built-in pools, built-in BBQs and such. I also take notes on any exterior deferred maintenance issues such as peeling paint, cracked or split trim boards, broken windows, etc.

Next I do the interior walk-through, and make notes on the type and condition of floor coverings, kitchen counters, cabinets and appliances, bathroom floors and tub surrounds, and any upgraded features such as a wet bar, whirlpool or jetted tub in the master, custom built-in entertainment centers and so on.

I'm basically looking at the overall quality of the finishes in the home and how well they've been maintained. If I see something like a large hole in the wall, cracked or broken tiles or missing cabinet doors, I usually make a note of it and include it in the appraisal report. I'm the eyes and ears for the lender, and it's my job to give them an accurate picture of the subject property.

Cosmetic finishes are not typically noted, as those are subjective to the individual owner. If you want orange and brown shag carpet with blue walls that's your business. And I'm usually not looking at your housekeeping skills, unless of course I step in something that's yellow and wet (yes, it happens!)

Once the inspection of the subject is complete, I look at the comparable sales or 'comps' in the area. Comparable sales mean recent confirmed closed sales in close proximity (usually within 1 mile of the subject), that are similar in age, quality of construction, utility and amenities.

After that, it's back to the office to work on appraisal reports. Comparisons are made between the subject and the comps, and the comps are adjusted to what the subject has, and then a final estimated value is derived from the data. The photos are attached, a location map is generated, and then the report is signed with a password protected digital signature and sent in electronically to the lender.

OK, so it sounds easy, and sometimes it's even fun, but there's a lot more analysis done and data that gets included than what I've covered here.

And no, I can't give you an estimated value for your home at the time of inspection - remember, that's just the first step to completing the appraisal. You'll have to wait a few days to get a copy of the completed report from the lender. (sorry)

So now you know what an appraisal is, and what my day job is all about.