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. Today, appraisal value is crucial as the housing market has deteriorated.

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.

The appraiser will first investigate the property through computer software, county records and other means to ascertain the appropriate information required for this particular piece of property.

When at the property, the appraiser will take photos, measure and draw a sketch of the property with dimensions. They will take notes of amenities, add ons and special features. They will also note deterioration and maintenance issues. The appraiser will check each room for type and condition, 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.

They are basically looking at the overall quality of the finishes in the home and how well they've been maintained. If something is seen like a large hole in the wall, cracked or broken tiles or missing cabinet doors, a note will be made of it and include it in the appraisal report. The appraiser is the eyes and ears for the lender, and it's their 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. They are not looking at your housekeeping skills, unless of course it is a potential health hazard.

Once the inspection of the subject is complete, the appraiser will 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 and sent to the lender.

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