What is involved with an appraisal?

Looking objectively at something is difficult for something as personal as a house. However, that is the very thing that an appraiser must do.

When buying, selling or refinancing a house one of the major drivers of the transaction is the house itself and in particular the value placed on it by an appraiser.

In addition to things that are not visible to the naked eye regarding a particular property; i.e. property taxes, clear title, easements, deed covenants, zoning, warranties and present and proposed assessments, there are items that are rather obvious. These concrete factors include room counts, age of the subject property, improvements made including kitchen and bathroom upgrades, square footage, proximity to shopping, employment and schools, age of the neighborhood, general value and condition of the neighborhood as well as general condition of the property. These factors are all taken into account by the appraiser.

To arrive at a market value estimate, an appraiser must consider both general and specific data as well as a comparison of similar homes. General data includes regional, city and neighborhood information and incorporates physical, economic and social factors that may influence property value.

In certain neighborhoods many of the homes are very similar if not identical. If your neighbors house sells for a certain amount and your house is nearly identical then that would be a good indicator of an approximate value for your home.

However, the thing to keep in mind is that as every customer is different, so is every house different. There are times that are considered “buyers markets” and other times that are considered “sellers markets.” Two nearly identical houses could have a drastically different value based on factors other than the house itself. In addition to the physical structures themselves an appraiser must also review economic conditions, supply and demand conditions, political or zoning factors and financing conditions.

As with a lot of things there are always areas open for interpretation, but when dealing with a certified mortgage professional there will be no guesswork when determining a values property.