Owners and Renters Agree: Owning a Home Is a Smart Decision
A substantial majority of both homeowners and current renters agree that
owning a home is a smart decision over the long term. That’s according
to the results of a National Association of REALTORS® survey of 3,793
adults... [read more]
The Importance of an Appraisal
An appraiser is a professional person who can tell
you what your home is worth. The
appraiser will come to your house and list the number and size of the rooms and
any extras, such as a fireplace, porch, pool, or garage. The appraiser will compare
your home and property to other homes that have sold recently with similar
features. The appraiser then estimates that your home might sell for
approximately the same amount of money as similar homes. This is called an
"appraisal." In short, an appraisal is the estimated amount of money
your home may sell for.
What is a Real Estate Appraiser?
A real estate appraiser is an impartial, independent third party who provides
an objective report on the estimate of value of real estate. The appraisal is
supported by the collection and analysis of data.
A real estate appraiser values real property (land, houses, buildings, etc.),
not personal property (cars, jewelry, furniture). The appraiser determines the
physical characteristics of the property to be appraised and estimates value
based upon three common approaches to value:
Sales Comparison Market Approach
Income Capitalization Approach
A state licensed real estate appraiser meets
nationally established standards for education and experience, and successfully
passes a comprehensive examination. A state licensed appraiser conforms to
national ethical and professional standards, which establish the standards for
ethics, competency and confidentiality governing professional appraisal
Home Inspections Are Not Appraisals
A property appraisal is a document
that provides an estimate of a property's market value. Lenders require
appraisals on properties prior to loan approval to ensure that the mortgage
loan amount is not more than the value of the property. Appraisals are for
lenders; home inspections are for buyers.
The Federal Housing Authority (FHA), which is part of the U.S. Department of
Housing and Urban Development (HUD), requires lenders to obtain appraisals of
properties securing FHA-insured loans. FHA requires appraisals for three
To estimate the market value of the
To make sure that the property meets FHA
minimum property requirements/standards (health and safety).
To make sure that the property is
The FHA appraisal process will note
property deficiencies that are readily observable and found not in compliance
with HUD's minimum property requirements/standards. These deficiencies may
not be the same as those items noted in a home inspection report.
When Should I Use An Appraiser?
You will likely need the services of a real estate appraiser whenever an
estimate of the value of your real estate is required. Most commonly, this
occurs when you apply for a real estate loan, either to purchase or refinance
your home. You may also need a real estate appraiser to assist in the appeal of
your property tax assessment, for insurance purposes, for probate and estate
settlements or other reasons.
What's My Property Worth?
It is common to ask the appraiser this question as soon as the appraiser has
inspected the property. The truth is at that time the appraiser doesn't yet
know. The inspection is the first step of many that the appraiser must complete
before a value is determined.
The appraiser measures the house from the outside to determine square footage.
The appraiser takes notes concern- ing the features of your house such as room
layout, number of bedrooms, baths, etc. The appraiser also makes a
determination of the general condition, appeal and functional layout of your
house. All of these items are taken into consideration in the appraisal report.
How Long Does an Appraisal Take?
The physical inspection of a typical property usually takes about twenty to
forty-five minutes. Sometimes an inspection can take longer if the house is
difficult to measure or has some unique features that require additional
investigation by the appraiser.
After the initial inspection of the property the appraiser spends time
examining or analyzing the neighborhood or area. The purpose of this is to
search for other properties that are similar to the property being appraised
that have sold recently and examine neighborhood influences. When the fieldwork
is finished, the appraiser completes the report at his office.
What Does The Appraiser Need to Know?
To help the appraiser complete the appraisal, you can provide some information
that is helpful. Please tell the appraiser of any previous sale on the property
within the last 12 months. Indicate if there is a pending contract to purchase
on the property. Does the property have any right of way or other easements? Is
there structural damage, or water leakage in the house? Is the property in a
flood zone? Basically, inform the appraiser about any hidden features or
detriments to the property.
How Do I
Choose an Appraiser?
Although federal and state laws usually require
that the lender must hire the appraiser when the appraisal is to be used for a
real estate loan, some lenders will allow you to select an appraiser from their
list of approved appraisers. For all other appraisals, you are allowed to
select your own appraiser.
Licensed real estate appraisers can be found on the internet or by talking to
your friends who have previously used an appraiser. Be sure to interview the
appraiser carefully to determine if he or she is licensed and experienced in
appraising your type of property.
Most licensed appraisers will provide an advance estimate of the cost to
perform the appraisal, and many will commit to a fixed fee for the appraisal.
It is always wise to obtain a written contract for services which includes a
description of what is to be appraised, the scope of the assignment, the
anticipated delivery date, the fee and terms of payment.
"Whatever you are, be a good one."
If you have a brokerage relationship with another agency, this is not intended as a solicitation. All information deemed reliable but not guaranteed.