We Know: What's a Home Appraisal

What is a home appraisal?

A home appraisal is an analysis of a home by a professional real estate appraiser. The purpose of the appraisal is to estimate the fair market value of the property, as of the specified date of valuation, for the proposed acquisition of the property rights or for refinancing.

What does Fair Market Value mean?

The Fair Market Value of the home, assessed by the appraiser, is determined by state law. The basis of fair market value for any residential property is the sale of a similar property. When sale prices for a given type of property are increasing, the market is said to be rising.

How do I chose a home appraiser?

When purchasing a home, your mortgage company will very likely order your appraisal and choose your appraiser. When refinancing your home, or using a mortgage broker, you may have a bit more say about who will do your appraisal. You may still want to get referrals from the mortgage company or broker, so the company will not question the appraisal.

What information is gathered for the appraisal report?

The appraiser performs an inspection of the subject property which should address:

  • Description of the neighborhood and proposed project area
  • The extent of the subject property inspection, including interior and exterior areas
  • Description of the physical characteristics of the property being appraised, and include a sketch of the property. This should include the location and dimensions of any improvements plus adequate photographs and maps of the property and area.
  • The value being appraised (usually fair market value), and its definition
  • The date of the appraisal report and the date of valuation
  • The known and observed encumbrances, if any
  • Title information
  • Location
  • Zoning
  • Present use
  • At least a 5-year sales history of the property

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