WHAT IS AN APPRAISAL? (AND WHAT IT'S NOT)
Simply put, it's an opinion of value. Usually, it's a current market value at a specific time for a specific
purpose.
It is not a home inspection. A home inspection is a more thorough examination of the condition of the
property.
WHY DO YOU NEED AN APPRAISAL?
Lenders use the property as collateral. Therefore, they want to know if it's worth enough to cover the
money they are lending.
From the buyer's point of view, you want to know it's worth what you're paying for. (The "good deal" you're
told you're getting really is a "good deal"!!)
Also, Insurance Companies need it to help cover the cost to replace the house if something should
happen to it. (Ex: Fire, Hurricane, etc.)
THINGS AN APPRAISER LOOKS FOR DURING AN INSPECTION:
-The overall quality of construction and condition of property
-Structural items include: settlement problems, cracks in walls/foundation
-Infestation: is there evidence of termites?
-Are there holes in walls? Any evidence of roof leaking or flooding problems?
HOW IS VALUE DETERMINED?
An Appraiser researches the subject property and neighborhood, and analyses the market. There are
three approaches to determine value?
-Cost Approach (what it would cast to rebuild the residence "as-is").
-Sales Comparison Approach: Analyzing current sales in the neighborhood for comparing amenities and
adjusting for differences to determine a value range.
-Income Approach: Used only if the property is a investment property generating income. The value can
be determined based on revenues.
**ITEMS THAT ARE NOT CONSIDERED MAINTENANCE OR COSMETIC DO NOT CONTRIBUTE TOWARDS VALUE:
1. Paint (interior or exterior)
2. Replacing floor coverings
3. Landscaping
4. Replacing appliances
Simply put, it's an opinion of value. Usually, it's a current market value at a specific time for a specific
purpose.
It is not a home inspection. A home inspection is a more thorough examination of the condition of the
property.
WHY DO YOU NEED AN APPRAISAL?
Lenders use the property as collateral. Therefore, they want to know if it's worth enough to cover the
money they are lending.
From the buyer's point of view, you want to know it's worth what you're paying for. (The "good deal" you're
told you're getting really is a "good deal"!!)
Also, Insurance Companies need it to help cover the cost to replace the house if something should
happen to it. (Ex: Fire, Hurricane, etc.)
THINGS AN APPRAISER LOOKS FOR DURING AN INSPECTION:
-The overall quality of construction and condition of property
-Structural items include: settlement problems, cracks in walls/foundation
-Infestation: is there evidence of termites?
-Are there holes in walls? Any evidence of roof leaking or flooding problems?
HOW IS VALUE DETERMINED?
An Appraiser researches the subject property and neighborhood, and analyses the market. There are
three approaches to determine value?
-Cost Approach (what it would cast to rebuild the residence "as-is").
-Sales Comparison Approach: Analyzing current sales in the neighborhood for comparing amenities and
adjusting for differences to determine a value range.
-Income Approach: Used only if the property is a investment property generating income. The value can
be determined based on revenues.
**ITEMS THAT ARE NOT CONSIDERED MAINTENANCE OR COSMETIC DO NOT CONTRIBUTE TOWARDS VALUE:
1. Paint (interior or exterior)
2. Replacing floor coverings
3. Landscaping
4. Replacing appliances
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