Why Get an Appraisal?

Most real estate transactions will require an appraisal to secure financing. Other situations that may require an appraisal include private mortgage insurance (PMI) removal, taxation purposes, divorce or estate settlement, or remodeling or proposed construction projects.

What’s An Appraisal?

An appraisal is an opinion of value or the act or process of estimating value. This opinion or estimate is derived by using the three common approaches, all derived from the market. They are:

  1. Cost Approach to value is what it would cost to replace or reproduce the improvements as of the date of the appraisal, less any Physical Deterioration, Functional Obsolescence and/or Economic Obsolescence. The remainder is added to the estimated Land Value.
  2. Sales Comparison Approach to value makes use of other “bench mark” properties of similar size, quality and location that have recently sold. Comparisons are made to the subject property.
  3. Income Approach to value is of primary importance in ascertaining the value of income producing properties. This approach provides an objective estimate of what a prudent investor would pay based upon the net income the property produces.

Then, after thorough analysis of all general and specific data gathered from the market, a final estimate or opinion of value is correlated and a report is prepared.

What is involved?

After initial research, including a Scope of Work determination, the homeowner/occupant is contacted for an appointment. While at the subject, the appraiser will verify building dimensions, note specific features and general property conditions. The neighborhood will be observed for predominate values, traffic patterns and other relevant characteristics.

If structural damage (decay, settling, water damage or pest infestation) is apparent, an inspection by a licensed professional may be recommended.

How is square footage determined?

Based on FNMA guidelines (outlined by ANSI), a single family home is measured by its exterior dimensions for above grade elevations. Finished attics and second stories with sloped ceilings may be given less consideration. Basements are calculated separately and garages are never included.

If your square footage is in question, call us to measure, calculate and prepare a building sketch for you! (This service is included with any full appraisal)

What items may be excluded from an appraisal?

Free-standing appliances, such as a range/oven or refrigerator, are personal property items and generally not considered in an appraiser´┐Żs value conclusion. Hot tubs are also excluded in most circumstances.

What constitutes a ‘good’ comparable?

Comparable sales are generally selected for their most similar characteristics (size, age, location, and building style). Other features of considerable value, such as waterfronts, views, acreage and/or overall construction quality (this includes manufactured and log homes), should be compared to other homes with those same features or characteristics. We live in a time sensitive market. Therefore, sales selected should have closed within the past 6 months. Active listings are not viewed or adjusted as comparables, but possibly used to illustrate current market conditions.

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