The Appraisal Process, What’s Involved?

The Appraisal Process, What’s Involved?

 

Lately, I’ve been asked about the appraisal process.  What’s actually involved?  In answer to this question, the appraiser looks at the condition of the overall house.  His inspection time to measure and walk through a home is probably less than 30 to 45 minutes.  Observed health issues obviously should be reported.  But consistently aren’t always.  As to the roof, they do take a look at it and can call for replacement if they see evidence of age, missing shingles or wet ceiling areas in a home.  The appraiser also has been instructed to take pictures of every room, bathroom and garage in a home and numerous exterior pictures including the street and the home from a variety of angels.

 

As to the process of determining value, the financial institutions have provided the appraiser with a form to complete.  It begins with details about the location of the property, the neighborhood and a thorough description of the improvement itself.  Afterwards, the appraiser selects comparable sales from similar neighborhoods which have recently sold.  It’s also become typical for the appraisal to include new active listings which are also similar. 

 

Once those have been selected, the appraiser, in a grid format, makes mathematical adjustments for differences between each of the comparable homes and your home.  Areas where your home has a superior quality received a positive adjustment.  Conversely, inferior characterizes receive a negative adjustment.  The areas where adjustments can be made include the age of the property, the location, the condition, number of bedrooms, number of bathrooms, type of heating system or whether a property is fenced.  When necessary or warranted, an adjustment can be made in each of those categories.

 

Once that is completed, the appraiser adds up all of the adjustments for each comparable and adds or subtracts that number from that properties sale or list price.  It’s certainly a detailed format.  Personally I believe an appraiser should attempt to bracket the comparable sales.  Meaning, one comp should be better, one not quite as nice and at least one that is similar.  From those conclusions, the appraiser makes a judgement as what value best describes your home and is supportable by the report itself. 

 

If you get the chance, perhaps you could let me know if this helps.  Thanks so much and Many Blessings to you this fine Monday Evening.