What is an Appraisal?

An appraisal as defined in the Appraisal Institute’s 12 edition of “The appraisal of Real Estate” is as follows:
The act or process of developing an opinion of value.  Example: An opinion of market value for a fee simple estate, leasehold estate, preservation easement, or other estate (to assist in mortgage lending decisions, to assist in purchase or sale decisions, etc.)
home appraisals


Market value is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

  • Buyer and seller are typically motivated;
  • Both parties are well informed or well advised, and each acting in what he or she considers his/her own best interest;
  • A reasonable time is allowed for exposure in the open market;
  • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
  • The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.


  • Estimating Market value to determine asking price for sale home.
  • Removing PMI (Private Mortgage Insurance)
  • Tax Assessments (reducing your property taxes)
  • Divorce settlements
  • Estate planning
  • Mortgage purposes
  • Employee relocations
  • Estimate asset value of real estate portfolio

This is where the appraiser comes in.  When you hire a state certified appraiser you can expect to receive an unbiased estimate of market value or, what a buyer might expect to pay and what a seller can expect to receive from the sale of real estate.

The Appraisal Inspection

The appraiser will physically inspect in interior and exterior of the residence in order to determine the quality of material and workmanship that went into the construction of the improvements and, to determine how well the home has been maintained.

The inspection often includes measuring the exterior of the improvements to determine gross living area or to provide a sketch of the floor plan. The appraiser will make note of additional features like fire place, basement finish, site improvements like built-in pool, tennis court, etc.  He or she will also look for any obvious assets or liabilities which would affect the value of the house.

After the inspection is complete the appraiser will compare the subject to other properties which have sold in the neighborhood. He or she will then make adjustments for differences in location, quality, size, condition and site improvements to name a few.

It’s similar to buying a car. If you are looking at a used car you will want to check out the condition of the interior and exterior for dents and dings.  Was the previous owner a smoker? Did they properly maintain the car by storing it in a garage and changing the oil every 5,000 miles?  You will want to “kick the tires”, check under the hood or have an automobile mechanic inspect it for a professional opinion.  Certified appraisers are the auto mechanic of the real estate field.

How to Prepare for an Appraisal

The appraiser would find the following items/documents useful if they are available:

  • Plat map showing the lot dimension and location of improvements.
  • Previous appraisals
  • List of recent improvements
  • Blue prints
  • Recent sale information on the property
  • Written property agreements, such as a maintenance agreement for a shared driveway
  • Title policy describing easements or encroachments
  • Most recent real estate tax bill and or legal description of the property
  • Recent home inspection reports or other recent reports for termites,  septic systems and wells
  • Information on “Homeowners Associations” or condominium covenants and fees.

Other suggestions:

  • Accessibility: Make sure that all areas of the home are accessible including basement area, attic and crawl space.
  • Housekeeping: A clean and tidy home can have a positive influence on appraisers.  If the house in clean and well maintained the appraiser will conclude a higher value that one that is not.
  • Maintenance: Repair minor things like leaky faucets, missing door handles and trim have a negative influence on market value.

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