Basic Questions And Answers Of Real Estate Appraisals

We often get the same questions asked by different clients. In this blog post, we decided to take some of the most frequently asked questions and create a “most common questions for appraisers” post.

This is a basic crash course in appraisals and the first installment for this series.

Q: How is home’s value determined?

A: Property value is determined in a number of ways. The most common determining factors are: Condition of the home, improvements, location and neighborhood, and housing market trends. Appraiser usually use the three most recently closed comparable sales from within a one mile radius.

Q: Do real estate appraisers ever calculate the appraised value of a home based on what price per square foot another home sold for?

A: Appraisers factor in the size of a home to determine the comparable sales that will be used in the report which ultimately determines the appraised value. However the appraiser does not reason like realtors. Realtors ofted say well if house “A” sold “X” dollars per square foot than house “B” should be worth “Y”.

Q: Are appraisers only hired to determine real estate values for mortgage lending transactions?

A: Appraisers may provide a variety of appraisal services which are not limited to mortgage transactions. Appraisals are often done for people getting ready to sell their home, estate planning when a relative passes away, buying a home for cash, divorce proceedings and tax appeal.

Q: Does a client need to know what is written in the appraisal document?

A: While the documents may seem confusing and full of real estate jargon, the home seller should make a copy of the documents and take note of the information, including the descriptions of the house and the comparable homes in the neighborhood.

Q: Is an appraisal inspection the same as a home inspection?

A: No, they are not the same thing. The appraiser’s inspection is just to see the home’s overall condition and upgrades based on what he/she can see with the naked eye. A licensed home inspector has the tools and expertise to look much deeper into the foundation, roof, electrical, plumbing, appliance, etc.

Q: If the prices of nearby homes seem to be rising, should the value of my home appreciate too?

A: Value appreciation is an individual thing. The information regarding nearby home values is a determining factor, however, there are many other factors to consider to determine whether or not a home has depreciated or appreciated in value. If homes in your area seem to be rising in value than the value of your home is also most likely to be rising in value.

Categorised in: Appraisal Tutorials & Info

This post was written by Joseph Castaneda