Residential Appraisals: The 411

April 21, 2010

There are plenty of things to keep in mind when getting your home appraised–everything from choosing the right appraiser for you to being sure you know just what your appraiser is doing.

Choosing Your Appraiser

Are you refinancing or buying a home? If so, your lender will most likely be choosing who appraises the home. If the choice is up to you, however, there are a few things you should do, including the following:

* Find a real estate broker, possibly by going online or looking in your phone book, to get a reference for an appraiser who is licensed.
* Double-check with your prospective appraiser his or her rates, and ask him or her when the appraisal will take place and ideally how long it will take to complete.
* Meet with your appraiser at a time that is most convenient for him or her, and ask that person when a good time for him or her to take a look at your property would be so that you are able to be home at the same time.
* Be sure to have the appraiser include the following in appraisal:
o A brief survey of your home and your neighborhood, and
o A note as to the sales of three homes within your area over the past three months.
* Make sure the appraiser you choose has no personal connection with you. This is especially important in that if you know the appraiser, you may not receive a fair appraisal. That person may be biased, and it may even cause problems with your relationship further down the road.

What You Can Find in an Appraisal Report

Ever wonder what exactly goes into the final appraisal report? It focuses specifically on your property, more commonly known among appraisers as the subject property, and its significantly noticeable negative qualities (i.e., a decaying foundation) that will bring down the subject property’s monetary value.

The report also compares your property to a few others in your area, including the type of area in which your house is located, such as a development. This helps when the appraiser is estimating the overall value of your home. The appraisal report also includes, in relation to the subject property’s value, your area’s general real estate market.

Lastly, the appraiser includes in the appraisal report an estimated sales time for your property.

Two Approaches to Appraising in the Residential Appraisal Field

Sales Comparison

The appraiser uses surrounding properties, or comparables (comps), to better estimate the subject property’s value. He or she then alters the characteristics of the comps so that the appraisal of the subject property is more accurate.

Cost

This type of approach is used mostly and most efficiently for newer properties. In this case, the price it costs to put together a house is readily available, so the appraiser can have a better idea of the monetary value. He or she is better able to estimate the cost it would take to rebuild the house if it was demolished in some way.

When looking to get your home appraised, be sure to keep the above in mind. It will be to your benefit in the long run.