Home Appraisal

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Real Estate

What is a Home Appraisal 

Whether you are buying a home or doing a refinance your lender will need an Professional Appraisal of the homes value. The appraisal will be conducted by a licensed third party Appraiser who should be familiar with properties in the area. The appraisal is be ordered by the lender and can cost between $200 to $600. The cost depends on the size/type of the home, location, condition and scope of work. The fee's will be paid for by the buyer or homeowner refinancing the loan.

Home appraisals are good for 120 days or 4 months or with a VA Home Loan 180 days. The reason for the short lifespan is because of the rapidly changing home market, this is especially true in hot real estate market where home prices are volatile. 

What Does a Home Appraiser Look For

The Appraiser's job is to determine a fair market value for the property. They will look at certain items that can affect the price or the lender's decision to lend money to purchase the property. A few if these items are the safety of the property, it's current condition, the structural integrity, upgrades/improvements, visible defects and conditions set by the lender. If the conditions are not satisfactory the Appraiser may order a property inspection. These issues will have to be done before the loan can be issued. 

A few more items the appraiser determine is the size of the home's livable space, number of bed and bath rooms, overall condition and maintenance of the home, total acreage of the lot are just a few items. 

Three Types of Real Estate Appraisals 

A Real Estate Appraisal will consist of three different reports. They are the Cost Approach, Sales Comparison and Income Capital Approach. Each of these approaches uses different variables, scope and methods for different types of properties and transactions. 

Cost Approach - This approach is based on how much money would it cost to construct the subject property. The reproduction method works on the basis of replacing the home using the same material. It also takes into consideration the age of the property, similar plots of land, construction and improvements. 

Sales Comparison Approach - This method looks at how much similar homes that have recently sold. Typically the appraiser compares the subject homes size, year built, features and location. This information is taken from the local Multiple Listing Service and assists the Appraiser to assign a value.

Income Capitalization Approach -  This method is often used for income producing properties and is based off of the value and it's income producing potential. Using data of similar homes and how much they have leased for. The calculation used is (income capital value = net operating income/capitalization rate). 


The real estate appraisal may be the final say on a transaction involving the buyer obtaining a home loan to purchase a property. They are used to assist the parties involved in the transaction. The purpose of an appraisal is to establish a common ground in terms of a fair-market price. For more information about appraisals or the home Buying or Selling process contact a local Real Estate Agent for more details.


Allen Deaver