The Importance of a Professional Real Estate Appraisal

It is the job of the professional appraiser to determine these values by gathering, analyzing, and applying information pertinent to a property.

Unquestionably, the professional opinion of the appraiser, backed by extensive training and knowledge, influences the decisions of people who own, manage, sell, purchase, invest in, and lend money on the security of real estate. And because the appraiser is trained to be an impartial third party in the lending process, this professional serves as a vital "check in the system," protecting real estate buyers from overpaying for property as well as lenders from over lending to buyers.

Appraiser Qualifications

Many states require all real estate appraisers to be, at a minimum, state licensed or states certified and have fulfilled rigorous education and experience requirements and must adhere to strict industry standards and a professional code of ethics as promulgated by the Appraisal Foundation.

Appraising the Inside of Your Home

Q: What does the appraiser look for inside my home?
A: Typically, an appraiser needs to document the condition of the interior, from the layout and features to any updates and construction. This information assists the appraiser in the valuation and comparison process.

Q: The appraiser only spent ten minutes in my house. How can he or she estimate a value in such a short time?
A: A physical inspection is usually only a small part of the overall appraisal process. How long it takes depends on how big and how complex your home is. Still, if you have concerns regarding the thoroughness of the appraisal inspection, contact your lender or the appraiser.

Q: How does the appraiser determine the square footage of my home's living area?
A: Generally, by measuring the exterior of the home. Non-living areas, such as garages or covered porches, aren't included.

Q: Does the appraiser include my finished basement in the appraisal?
A: Finished basements are generally calculated separately from the above-ground living area. The local market will dictate the contributory value of the finished basement, which can be influenced by government regulations, the quality of the finish, and other factors. Appraisals & Refinancing

Q: I am refinancing my house with a local bank. If my bank appraisal comes out higher than my tax value, will my taxes go up?
A: They shouldn't. The bank appraiser is expected to maintain confidentiality with the client, which in this case would be the bank, not the local tax authorities.

Q: I recently refinanced my house. Am I entitled to a copy of my appraisal?
A: That depends on the bank, which in most cases is considered the client for the appraisal. Contact your lending institution with any questions about valuation or the appraisal.

Q: Last year I refinanced my home and the appraiser came inside to do an inspection. This year I got an equity loan and the appraiser never came inside to do the appraisal. How can the appraiser arrive at a value without coming inside?
A: A drive-by appraisal utilizes a similar process for estimating market value as the full appraisal with interior inspection. However, the drive-by appraiser must rely on outside sources for their information. For example, the appraiser may check court records or a multiple listing service record to obtain the age, size, and other characteristics of your home. Although these records may not always be accurate, they provide some basic information to complete the appraisal.

Home Improvements & External Factors

Q: Does an appraiser include my above-ground pool or my shed in the appraisal?
A: The appraiser generally considers only permanent fixtures and real property. Because many above-ground pools and small sheds are not permanent structures, they usually aren't included in the analysis. Depending on the specific installation process, however, an above ground pool or small shed might be considered part of the real estate.

Q: What improvements add the most value to my home?
A: How much any particular improvement will be worth to your home's market value, what appraisers call the contributory value, varies from market to market, driven by the wants and needs of each neighborhood. However, a local appraiser familiar with your market can help you figure out the best home-improvement value.

Q: If my neighbors fix up their home will my property value go up?
A: Maybe, but the impact of neighborhood property improvements also varies widely from market to market. Again, consult with a local appraiser.

Q: I have the biggest house in the neighborhood. If the appraiser users other home sales in my neighborhood for comparison, will that make my appraised value less?
A: Not necessarily. The appraiser will consider all relevant real estate data in the area. But when analyzing other recent sales, the appraiser generally will look for the homes most comparable to yours in terms of physical characteristics and the appeal of the location. In other words, the sales in your neighborhood might not make for the best comparisons if those homes are significantly less appealing. The appraiser may determine that the best for comparison home sales are in another neighborhood.

by Domania