There are several steps taken by an appraiser to determine a property’s value, which include visiting the property in-person and reviewing recently-completed sales of comparable homes. The data gathered by the appraiser during this process is combined and presented to you in a final report of value.
Viewing the Property
The in-person part of an appraisal often takes over an hour, depending on your home size. The appraiser will measure the property’s square footage, check the number of bedrooms and bathrooms in your home and compare the findings with housing data provided by local county records to ensure accuracy.
The appraiser also will check the status of the major systems and structure of the house. During a viewing, appraisals usually answer questions such as,
- – Is there water, termite or mold damage?
- – Is the furnace in good shape?
- – Does the plumbing leak?
- – Will any major systems or structures need replacement, such as the roof?
Appraisers will account for many home improvements and upgrades as well. This is perhaps the most confusing area for new buyers and sellers, due to the fact that remodeling and other home upgrades may not have universal value.
For example, a new roof will be desirable to nearly any buyer, but the costs and upkeep of a swimming pool may not be. It’s advisable to put in some research before you begin a home remodeling project to ensure your investment is worthwhile.
Comparables: Evaluation of Similar Home Sales
The next step is for the appraiser to look at comparables, also often referred to as “comps.” Comparables are similar homes that have recently sold in the general area or even that specific neighborhood or subdivision. Appraisers look for houses that share similar characteristics with the subject property, such as size, age and architectural style. Comps typically only include homes listed and sold within the past three to six months.
The Final Report of Value
The last step in the home appraisal process is preparing a final report of value. This report will provide you and your lender with a complete property analysis. It will also outline how the appraiser calculated your home’s worth. Typically, the final report of value will cover the following items:
- – Size and condition of the house
- – Comments about serious structural problems, like cracked foundations, wet basements, windows that need replacement and roofing that needs repair
- – Permanent fixtures, such as lights, ceiling fans and plumbing, including faucets
- – Details about any home renovations such as updated kitchens, bathrooms or new flooring
- – Comments about the surrounding area, including positive and negative local features
- – Maps, photographs and sketches of the property, both inside and out
- – A detailed current market analysis, including recent sales of comparable homes