WHAT IS AN APPRAISAL? WHO IS AN APPRAISER? WHO PICKS THE APPRAISER?

What is an appraisal?

An appraisal is a survey of a subject property by a professional for their opinion of the property market value. Appraisals are done on various properties to include: agricultural property, commercial, industrial, land, office, manufacturing, residential, retail properties and others.  In most cases an appraisal is done for a bank to determine value for a specific purpose, such as a loan, reconstruction costs, county tax assessments and data, etc.  Appraisers are state licensed and require formal training and education.

The home appraisal is a detailed report that looks at such items as the condition of the home, the neighborhood, location, what similar homes are selling for, and how quickly similar homes sell. The appraisal may be a sales comparison or a cost/replacement opinion of value. There is also an income appraisal, but this is done primarily with commercial properties. The sales comparison will look at other properties in your neighborhood and what they are selling for and then figure how they compare to your home. With a cost/replacement opinion of value the appraiser is looking at what it would cost to replace the home if destroyed; this is more commonly used for new homes.

Important Note: An appraisal is not a home inspection! Appraisers are looking for value -- they are looking for anything affecting the potential value of the home.  They may come across some deficiencies/concerns and possibly material defects to report to the lender which may affect potential value.  They do not examine the home's FULL condition or every component therein. An Appraiser's job is to determine a value for the lender to ensure the loan is a viable loan to be made. 

Who is an appraiser?

Appraisers are licensed by individual states and are held to strict ethical standards. Appraisers are the third party whose purpose is to give their opinion of the market value of a home. Ideally the appraiser should not be connected with anyone involved with the home transaction.

Appraisers are licensed by individual states and are held to strict ethical standards. Appraisers are the third party whose purpose is to give their opinion of the market value of a property. Ideally the appraiser should not be connected with anyone involved with the property transaction.

Who picks the appraiser?                                                                    

When an offer is made on the house the appraiser will be determined by the lender. The lender may have their own appraiser or contract with an independent party.