Home Appraisals (Part 1 Of 2)
November 3, 2008
One of the most common ways people discover the value of their home is by having an appraisal done by a local real estate professional that provides – you guessed it – real estate appraisals. Receiving a professional appraisal is required when applying for a refinance on a mortgage.
Home appraisals are done to establish a house’s market value. No two properties are identical and all properties are located on different pieces of land. An independent third party with knowledge of the real estate market is needed to be able to compare “apples to oranges.” Real estate appraisers are those professionals.
Below you can find basic information on how the home appraisal process determines house value with tips on how to get connected with local experts who can help you with any real estate needs.
What exactly is the goal of a home appraisal? Is it the same as a house inspection?
There is some confusion among the general public in the difference between a real estate appraiser and a home inspector. An appraiser is a real estate professional that will review your personal home and assign a market value to it. You will hire a home inspector to go through a home you are considering buying.
Real estate appraisers are objective, third party experts on their local real estate market. While both the appraiser and inspector walk through the home and give it an “inspection,” they look for completely different things. An appraiser will note things like a roof leak or termite damage when conducting an appraisal, but they are only concerned with establishing the fair market value of a property.
In contrast, home inspectors have no interest in determining the market value of a house. Inspectors will check things like the operation of major appliances and the structural quality of a property in order to validate that the house was built using best practices. Having an appraisal completed does not guarantee the condition of a home.
How does a house appraiser determine my house value?
Depending on the type of property being appraised, a home appraiser can use two different approaches to develop their assessment of fair market value.
- The cost approach: This approach will likely be used by an appraiser to evaluate new properties because the cost to build is defined. A simple estimate of the cost to replace a destroyed section is all that is required.
- The sales comparison approach: The appraiser takes your property and compares it to similar properties in the area. Because of the fact that an appraiser is essentially comparing “apples to oranges” because no two properties are the same, adjustments are made to the comparable homes to create a similarity for comparison. The appraisal result shows the market value of each comparable home if it had the same components as the one being appraised.
For more information on home appraisals, please continue reading on the following page.
To connect with a local real estate agent and receive a free, no obligation home value estimate, type your zip code in the box in the top right corner of our home page and follow the instructions on the next page.
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