How an Appraisal is Prepared
The appraisal process is the process of collecting, analyzing and reconciling data that relates to the property being appraised. This data is formatted in a logical order to lead the reader of the report to the same conclusion as the appraiser. There are several types of appraisal reports. The Self Contained report, the Summary Appraisal report, and the Restricted Appraisal report.
The preparation of the appraisal generally begins with an interior and exterior inspection of the building and property. The appraiser looks for assets and detriments that the real estate offers by viewing the property with an objective/non bias eye.
Some of the more important features of the property are gross living area, condition, quality of construction, location, layout, number of bedrooms and bathrooms and lot size to name a few. The appraiser also notes amenities such as central a/c, fireplaces, decks, recent renovations, pool, fencing etc. It is important for the homeowner to point out amenities, or recent improvements that may not be obvious to the appraiser in a normal walk through of the subject property.
The appraiser also makes an assessment of the neighborhood and surrounding area, noting the location of amenities which may be important to the average home owner and/or buyer. In some cases these same items may be a detriment to the property based on their proximity to the subject. Residential properties that are too close to non- residential properties may be viewed as less desirable by the typical purchaser, and reflected as such in the appraisal report.
The appraiser needs to confirm tax data, zoning classification, and to confirm sales in the area. This can be done through various different sources such as: public records, Multiple Listing Service (MLS), professional associations, publications, physical inspections and experts (builders, attorneys, lenders and others). When all the data has been gathered it is used to make a Highest & Best Use Analysis of the subject property. Never the less it is part of the appraisal process. The data collection, focuses on the the three approaches to value. These approaches to value are the Cost Approach, the Income Approach, and the Market Data Approach. Not all three approaches to value are relevant in each appraisal assignment. Depending upon the assignment, the appraiser may choose not to use one or more of these approaches.
In the final stages of the appraisal process, the appraiser analyzes and adjusts the data collected. The appraiser reconciles the three approaches to value, giving greatest weight to the approach considered most appropriate for the property being appraised. If more than one approach to value is used in the appraisal report, each approach generally indicates a value that is reasonably close to the other approaches.
The final report is checked for consistency, accuracy, clarity and conformity to appraisal guidelines/regulations. Occasionally other experts will be hired to review our appraisals for better quality control. Once the review is complete the final changes are made and the appraisal report is electronically published and the client receives two digitally signed original reports, usually they are in pdf and xml format.
Preparation For The Appraiser
The homeowner/lender should have certain items available to the appraiser either when the property is inspected or prior to inspection. This will speed the process along smoothly. The appraiser needs a copy of the deed, or sales contract, a survey, and a copy of a recent tax bill. Please be sure to point out any recent improvements to the property. If you are aware of any recent sales in the area, that may be of help and be sure to point this out as well. The appraiser may or may not use all of the data that you supply, but you can be sure that the appraiser will appreciate your efforts and will consider them in the appraisal process.
Prior to your appointment with an appraiser, you may want to spruce up your home. You can find some helpful tips located on our home improvements page.
Knowing Your Rights!
Under the Equal Credit Opportunity Act, your lender must provide you with a copy of the appraisal report upon your written request. If you are dissatisfied with any information contained in your appraisal report, you should contact your lender immediately.