What is an appraisal?

When you purchase a home, it will most likely be the largest, single investment that you'll ever make. Whether it's your main residence, a vacation home or an investment property, your purchase of real property is a very complex financial transaction that requires many people to make it happen properly.

Where does the appraiser fall into this picture? The appraiser is the person who makes sure that the value of the property is in line with the amount being paid. He or she is essentially the eyes and ears for the mortgage company in order to make sure that the property being purchased is what they think it is. The appraiser doesn't work for the mortgage company, but instead is contracted to appraise properties on behalf of the mortgage company.

An appraisal is an unbiased estimate of what a buyer might expect to pay for a parcel of real estate, where both buyer and seller are informed parties. A state licensed or certified professional appraiser provides the most accurate estimate of the true value of the property. This is because of required ongoing education, experience and integrity that ensures the public that professional appraisers will do their jobs properly and accurately.

The Inspection

It all starts with the inspection. An appraiser's responsibility is to inspect the property being appraised to determine the true status of that property. He or she must actually see features, such as the location, lot, number of bedrooms, kitchen, bathrooms, and so on, to ensure that they really exist and are in the condition a reasonable buyer would expect them to be. Do county tax records have an accurate estimate of the size of the home? The inspection generally includes a measurement and sketch of the property- this is how gross living area is confirmed as well as layout of the property. Most importantly, the appraiser looks for any obvious features - or defects - that might affect the value of the property. Perhaps this property has a swimming pool or a remodeled kitchen, or it may back up to the freeway!. These are examples of features that may affect value one way or another.

The Real Work

"But he was only here for 30 minutes!" Let's just say that typically, the inspection is the quickest and easiest part of the process. In addition to inspecting the property, the appraiser analyzes regional and local trends, nearby amenities, employment opportunities, building costs, and comparable sales. In the case of investment properties, the appraiser will also analyze current lease markets as well. Once all this information is interpreted and assembled by the appraiser, then a final estimate of value is determined.