Appraisal FAQ

What is an Appraisal?

A residential real estate appraisal, land valuation or property valuation, is a professional opinion of value on a home or property.  This opinion of value helps determine the amount of financing needed to purchase or refinance a home, or to help determine a home or property's worth. 

Should the assessed value equal market value?

While most states support the concept that assessed value approximates the estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when properties in the vicinity have not been reassessed for an extended period.

Will the appraised value differ from the buyer or the seller?

The appraiser has no vested interest in the outcome of the appraisal and is obligated to render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Should market value equal replacement cost?

Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind.

Do appraisers use formulas to establish home value?

Appraisers make a detailed analysis of all factors pertaining to the value of a home including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.

Do properties appreciate equally in all economies?

Value appreciation of a specific property must be determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. This is true in good times as well as bad.

Do appraisers determine value simply by looking at the exterior?

Property value is determined by a number of factors, including location, condition, improvements, amenities, and market trends.

Who owns the appraisal?

Although the appraisal is paid for by the borrower, the appraisal is legally owned by the lender, unless the lender "releases its interest" in the document. However, consumers must be given a copy of the appraisal report, upon written request, under the Equal Credit Opportunity Act.

As the borrower, should I be concerned with the appraisal report details?

Only if consumers read a copy of their appraisal can they double-check its accuracy and question the result. Also, it makes a valuable record for future reference, containing useful and often-revealing information:  including the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the vicinity.

What services can appraisers provide?

Depending upon their qualifications and designations, appraisers can and do provide a variety of services, including information useful for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Is an appraisal inspection the same as a home inspection?

An appraisal inspection does not serve the same purpose as a home inspection. The appraiser forms an opinion of value in the appraisal process and resulting report. A home inspector determines the condition of the home and its major components and reports these findings.