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Understanding Home Appraisals

What Goes Into A Home Value Appraisal?

The home value appraisal is a fairly cut-and-dried process, in most cases.  But it’s an important one, since a good home appraisal can net you several thousand dollars at time of sale.  Here are some of the steps a qualified appraiser takes:

Physical Data

This is the raw information about your house.  How many square feet total?  How many usable square feet?  What’s the age of the house?  How big is the lot?  How many bedrooms?  Are there any additions or outbuildings?

Comparables

The appraiser’s next step is to look up the home values of other houses in your immediate neighborhood.  He may do this by looking on the tax rolls or by looking into what selling prices homes brought in, say, a 3-block radius of your house.  “Comparables” will give him a yardstick when calculating your home value appraisal.  If houses are selling low in your neighborhood, chances are that yours will sell low too (even if it’s in good shape and you’ve made improvements).

Field Inspection

This would be the phase when the appraiser comes out to look at the property itself.  He’ll take pictures of the front and back of the house and the interior, and goes over the house with a fine-tooth comb to find anything that might boost or hurt the house’s home value appraisal.  At this point, he should discuss the other factors that might come into play in the appraisal (such as proximity to train tracks or difficult access to the property).

When Is A Home Appraisal Used?

Obviously, a bank is going to require a home appraisal when it’s time to sell or purchase a home.  The other instance when you might want an appraisal is after completing home improvements; the appraiser would get a good home value appraisal completed for insurance purposes.  

A couple of things to remember:

  • Even though appraisals go by a set method and formula, there is still are still subjective differences; 20 appraisers might give you 20 different home values.  Research your appraiser beforehand, and get references.
  • The bigger the city, the easier it is to get a qualified appraisal.  Smaller towns won’t have the same volume of home sales, so there are fewer “comps” to draw from.
  • A CMA (Competitive Market Analysis) is NOT the same as an appraisal.  A CMA is what a real estate agent draws up as a rough, ballpark figure of what your home might bring at current market conditions.