What is an Appraisal Report?

An appraisal report is a thought process leading to an opinion of value.  This opinion or estimate is arrived through a formal process that typically uses one or more of the “common approaches to value”.  

The “Sales Comparison Approach”, this involves making a comparison to other similar, nearby properties which have recently sold.  The sales comparison approach is normally the most accurate and best indicator of value for a residential property. 

The “Cost Approach”, this is what it would cost to replace or rebuild the improvements, less physical deterioration and other factors, plus the land value. 

The “Income Approach”, this is most important in appraising income producing properties, it involves estimating what an investor would pay based on the income produced by the property.

What does a professional Appraiser do?

An appraiser provides a professional, unbiased opinion of market value which is used in making real estate decisions.  Appraisers present their formal analysis in appraisal reports.

Who do Appraisers work for?

Appraisers are employed by lenders/clients to estimate the value of real estate involved in a loan transaction.  Appraisers also provide opinions of value for home owners, estate transactions and real property transfers.

Who actually owns the Appraisal Report?

The appraisal report is owned by the lender/client.  While the home buyer may pay for the report as part of the closing costs, the lender/client retains the right to use the report or any information contained within.  The home buyer is entitled to a copy of the report and can request it from the lender/client.  The report is only entitled to be used as described in the Intent of Use and only with the permission of the lender/client.

Why do I need a professional Appraisal?

Anytime the value of real property is being used to make a financial decision, an appraisal report is warranted.  If you’re selling, buying or transferring your real estate property, an appraisal helps establish the most appropriate market value.  If you’re engaged in an estate settlement or divorce, it helps each party to know the fair market value.  Knowing the true market value helps you can make the right financial decisions.