A real estate appraisal is the practice of developing an opinion of the value of property, or what is commonly called “market value.”
Appraisals can vary by state, but there are three main parts to a home appraisal:
- The inspection – a licensed appraiser comes to the property and inspects it to determine fair market value
- Comparables – after the inspection, the appraiser researches similar homes in your area and compares recent sales to determine market value.
- Final appraisal report – using the data gathered from the inspection and comparables research, your appraiser issues a final appraisal report
Things You Need To Know About A Real Estate Appraisal Inspection
- The appraiser confirms that the property exists and is in livable condition.
- The appraiser confirms reported square footage.
- The appraiser checks all rooms for obvious damage that could affect value.
- The appraiser will verify reported upgrades (you’ll provide that information prior to the inspection).
- The appraiser will note all permanent features to a home that could affect value. Like the built-in appliances in the kitchen. Removable items are not included in appraised value.
- The appraiser will check the basement for updates and finishing, but NEVER include it in sq. footage. Updated basements can increase a property’s value, but they can’t be included in sq. footage.
- The appraiser verifies there is a working furnace and air. But remember, they don’t test a furnace the way a home inspector would. They just confirm it exists and appears to work.
- The appraiser checks the front and back of the house and measures all land area on the property.
- The appraisal verifies the number of bedrooms. To be counted as a bedroom, the room must have closets and windows. Keep in mind: DON’T start a room project you don’t plan on finishing before the inspection. It may hurt your value.
- Finally, remember: What you spend on updates may or may not raise the value of your home a by the same amount. Don’t expect that $25,000 kitchen to raise the value of your home $25,000. It may or may not.