Page 9 - Kim Sargent GuideBuyerCustom.pdf
P. 9
The Property Appraisal
Having an idea of what is involved in appraising a It is important to consider that the appraiser will be
piece of property can greatly help in maximizing taking photographs of the street scene and of the
the appraised value and avoiding costly details front of the subject property. The street scene gives
and re-inspections. The appraisal process consists the lender some kind of idea as to the type of
of several steps. The following are the major steps neighborhood in which the home is located. The
in the sequence normally followed by appraisers. photograph of the front of the home gives the
lender an idea of its condition and curb appeal.
Research the subject property lot size, And lastly, a photograph of the back of the home
bedrooms, year built, & square footage. and part of the rear yard is taken.
Gather date on recent sales in the subject Many homeowners do not take care of the
property’s neighborhood. The appraiser needs to
locate at least three and preferably more similar rear portion of their homes and back
sized homes that have sold and closed escrow in yards, so for this reason, the rear
the neighborhood. The homes need to be within photograph is required.
close proximity of the subject property and sold In most cases (over 90% of the time), what you see
within the past six months. The homes are in the condition of the exterior of the home will be
considered the “comparable properties” or repeated almost exactly in the interior. An
“comps” for short. appraiser will call in advance to set up the
appointment to inspect the home. At that time, any
Field inspection consists of two parts: information about the home’s size, number of
First the inspection of the subject bedrooms, number of bathrooms, pool, enclosed
property, and second, the exterior patio, etc., should be supplied. The more that is
inspection of the comparable properties known about the property prior to the inspection,
which have been selected to estimate the the better the appraiser can focus on researching
value of the subject property. the most similar comparables.
The subject property inspection consists of taking Quick Take
photographs of the street scene, front of the If you have any question about the value of the
home and rear of the home which may include house you bid on, add an appraisal contingency to
portions of the yard. The appraiser will make an your purchase offer. This provision stipulates that
estimated value of the home. He will also draw a the property must appraise for at least the
floor plan of the home while doing the inspection. purchase price you offer. If the appraisal comes in
The inspection of the comparable properties is lower, you can back out of the deal or renegotiate
limited to an exterior inspection. For features that the price.
cannot be seen from the street, the appraiser has
reports from the local Multiple Listing Service Synopsis – An appraisal is a third party estimate of
(MLS), county public records and appraisal files the value of a piece of property at a particular point
in time. It can affirm your offer price or block your
along with other sources to help determine the transaction entirely. Understand how real estate
condition and amenities of the comparables. After appraisals and appraisers work so you can solve
the field inspection has been completed, the any problems that come up.
appraiser must determine which comparable
properties most resemble the subject property,
making slight adjustments in value for any
differences between them. After making required
adjustments, the appraiser must go through the
reconciliation process with the three comparable
properties to determine a final estimated value.
This method of estimation value is called the
Direct Sales Comparison Approach to Value, and it
accounts for nearly all of the considerations in 8
determining values of single family homes.
