November 09, 2021 at 10:24am | Lisa Crumby

What is a Home Appraisal?

A home appraisal is the determination of the fair-market-value of your house based on current market conditions. Part of the appraisal process is determining the scope-of-work for the property and utilizing the sales comparison analysis techniques to determine value. Appraisers compare your house to other, similar houses in the market that have recently sold. It is essential to note that the residential real estate appraisal process is considered more of an art-form than a science, and the appraisal process is more complicated than explained here. Each individual appraiser generally has his or her own style, and it is possible that they may come to different conclusions of value regarding your property.
Why do I need my home appraised?If You’re Buying a Home

An appraisal gives you and your lender an estimate of a home’s value. It helps make sure your offer, the purchase price, is in line with the home’s fair market value. To make an appraisal, the home is inspected and compared to similar homes in the area that have been sold within the last six to twelve months. While PrimeLending chooses who will conduct the appraisal, this is generally an expense paid for by the buyer. Some of the things that are considered in the appraisal include:
  • Sale price of other area homes
  • Square footage of the home
  • Number of bedrooms and bathrooms
  • Overall condition of the home
  • Quality of landscaping
  • Amenities like swimming pools
  • Unique features of the home
  • Size and condition of the land the home is on
  • Visual inspections of the foundation, plumbing and electrical systems
  • Finishing details such as hardwood floors or updated lighting
  • Quality of the basement and attic
  • Surrounding neighborhood and area
It’s important to know the appraisal is not the same thing as your home inspection, which will occur after your sales contract is signed. The appraisal primarily documents obvious visual conditions, along with a cost and size comparison to other homes. You should receive your report within several days to a week or so.

If You’re Selling Your Home

Once you have an offer to buy your home you can expect the buyer’s lender to send an appraiser to inspect the house. Before this happens, you need to make sure your home is ready.
Correct any maintenance or other issues related to health or safety. Make any obvious cosmetic repairs you’re aware of. Get rid of clutter and make sure it’s clean. Prepare a list of recent repairs or renovations for the appraiser, include the dates/costs of the repairs along with receipts. A home that looks cared for will can result in a better and higher appraisal.
Be sure to place pets out of the way while the appraiser is onsite and don’t water the yard right before the appraiser arrives. The appraiser will need full access to your home, including the closets, attic and crawl space, etc.
Here are a few of the potential problem areas an appraiser will look for.
  • Electric garage door opener not working
  • Cracks in the walls, ceiling or foundation
  • Leaking pipes
  • Roof has less than three years of life remaining
  • Water stains on ceilings
  • Wiring not up to code
Why do I need my home appraised?

There are a variety of reasons why you might need your house appraised. It is possible that the buyer and the seller both get third-party appraisals of the property in order to help determine a listing price, a purchase offer, or to agree upon a fair market value. Additionally, lenders require an appraisal from a licensed appraiser in order for a buyer to secure a mortgage. Lenders want to make sure that the house will sell for at least the amount that is being lent. Though buying and selling is the most common situation, there are numerous other reasons for a home appraisal, including: refinancing, divorce, estate settlement (probate), estate planning, bankruptcy, private mortgage insurance removal, and eminent domain. These are just a few reasons why you might need a home appraisal. Check out our services page for more information regarding these appraisal situations.

Residential Real Estate Appraisers

You can’t have just anyone perform an appraisal of your property. Certified residential appraisers are required to take and pass state regulated courses in order to be licensed. Appraisers are also required to accumulate a certain number of on-the-job experience hours before getting licensed. You are in good hands at Denver Professional Appraisal, as all of our appraisers are licensed with years of experience and in good standing. Additionally, an appraiser must be an objective, third-party with no connection what-so-ever to the subject property or to any persons involved in the transaction. We guarantee complete objectivity and a high degree of professionalism when it comes to the valuation of your property.     


The Appraisal Report


A residential real estate appraisal report is based on the appraiser’s on-site inspection of the subject property as well as the analysis of comparable properties and the surrounding market area. These reports can be very detailed and include statements of factors that may hurt the overall value of the property, such as poor access, environmental hazards on or near the property, and poor location to name a few. The appraisal report will also provide an estimated average sales time based on current market conditions, and an explanation of the type of area where the subject property resides.

 Real estate appraisals for single-family residential properties generally utilize two main methods to determine home value. In most situations, the sales comparison approach is used. Using this method, the appraiser compares the subject property to similar properties in the area that have sold recently. The second approach to value, the cost approach, is best used when valuing a property that has been built recently. The appraiser determines how much it would cost to replace the home if it were destroyed. Though the sales comparison approach is the most commonly utilized, we understand that each home appraisal is unique and we implement the best valuation approach to fit the situation.

The Valuation Process

The appraisal profession has been working toward a perfect process for estimating the value of real estate for over 50 years; which continues to improve as time goes on. The basic process that appraisers use to determine the value of your home is as follows:

  1. Definition of the problem

  2. Determine the scope of work

  3. Data collection and property description

  4. Data analysis

  5. Land (site) value opinion

  6. Application of the approaches to value

  7. Reconciliation of value indications & final opinion of value

  8. Report of final opinion of value & conclusions


Share

check_circle

You message has been sent!

Send us a Message


You agree to receive automated promotional messages from Ivy Block Realty regarding real estate information and education.Click here for terms and privacy policy. Message frequency varies. To opt out of receiving messages from me, text STOP to cancel. Reply HELP for help. Message and data rates may apply.