What is an Appraisal?


An appraisal is a professional opinion of a property’s value by an independent, licensed appraiser. Whether you are buying a home, refinancing a mortgage, settling a legal issue, appealing property taxes or just need to know the current value of a property, the appraisal will provide a home’s true property value. An appraisal will determine the market value of your home and give you a solid backing on which you can make the most of your real estate investment.

Online Estimate, CMA or Appraisal

Don’t confuse an online estimate or comparative market analysis (CMA) with an appraisal. Online computer generated valuation providers offer an estimate of the value of a property. The accuracy is limited to the basic comparable data available that may be incomplete or incorrect; also, the program cannot physically inspect a property to verify the condition. Real estate agents use CMAs to help home sellers determine a realistic asking price. Experienced agents often come very close to an appraiser’s opinion of value with a CMA, but an appraiser’s report is much more detailed and is the only valuation report a bank or attorney will consider when securing a loan or settling an estate.

Impartial and unbiased

An appraiser works independently of homeowners, mortgage companies and lenders to determine the value of a property. If you’re buying the home and having it financed, your lender will likely choose the appraiser. That’s fine, as long as the appraiser has no direct connection to the company. The appraiser should not be influenced by any party. Check www.appraiserline.com to search all the appraisers near you.


Appraisers are licensed by state standards. Appraisers must acquire many hours of education, pass a licensing exam, acquire hours of appraisal experience and then pass another test before they are certified to work on any type of real estate. Whoever does the appraisal on your property should to be certified.

What you will see in the appraisal report

Appraisals are very detailed reports, but here are a few things they include:

  • Details about the subject property, along with side-by-side comparisons of at least three similar properties.
  • An assessment of the overall real estate market in the area
  • Statements about issues or features the appraiser finds that contribute or impact the property’s value. These can be broken down into three categories: physical, functional and external. These are often referred to as obsolescence. An example of a physical issue would be a hole in the roof. An example of a functional issues is a 5 bedroom 1 bathroom house. An example of an external issue would be the property being located near a road with heavy traffic or train noise.
  • What type of area the home is in (a PUD development, condominium project, duplex, acreage, etc.).
  • Notations about seriously flawed characteristics, such as a damaged foundation.

Appraisals vs. Home Inspections

Appraisers make notations about obvious problems they see, but they are not home inspectors. Never count on an appraisal to help you determine if the home is in good condition. An inspection by a trained home inspector will provide further important protections for you. The home inspector’s report will inform you with the details of any needed major repairs. Find a local home inspector here.

Approaches to Value

Appraisers provide a professional, unbiased opinion of market value to be used in making real estate decisions. They present their formal analysis in appraisal reports. There are three common approaches to value: Cost Approach – what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. Sales Comparison Approach – making a comparison to other similar, nearby properties which have recently sold. This is normally the most accurate and best indicator of value for a residential property. Income Approach – estimating what an investor would pay based on the income produced by the property.

Access to Home Information

You can expect the appraiser to ask for information about your property. This information can help the appraiser form their opinion of value of the property. Provide documentation such as invoices from recent remodeling projects or upgrades. This information can also include surveys and blueprints, list of recent home improvements, the home’s square footage, types and number of rooms and any homeowner’s association dues you might have to pay. The appraiser may also ask to see your utility bills, costs for taxes and insurance, and even a copy of your tax bill.

Documenting the Home

The appraiser is required to record certain things during the walk-through. The appraiser will photograph the entire outside of the home. The appraiser may take interior photos of the main living areas. The appraiser will note which rooms are where and any features that contribute to the value.

Copy of Report

If you ordered the appraisal for the property and you are named as the intended user, you should receive a copy of the appraisal. If your lender ordered the appraisal, you have the right to ask to see a copy of the report before you close on the loan. You’ll need to ask your lender for a copy of the appraisal report. This could be important information if your appraisal came up with a home value that was less than the amount you are trying to finance. You have the right to contest the appraisal, and a copy of the appraisal may allow you the information you need to wage a successful appeal.

Looking for more information on buying a home? Our Mortgage 101 Handbook is the ultimate guide for First Time Home Buyers.

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