What are the benefits of having an Appraisal?
About Appraisers and Appraisals
Residential Appraisal Methods
Appraisers are certified by individual states after completing coursework and internship hours that familiarize the appraiser with their real estate markets.
There are two common appraisal methods used for residential properties:
The lender might use an appraiser on its staff, or contract with an independent appraiser. If you are permitted to choose an appraiser, and it isn't someone the lender is familiar with, the results might be subject to review before they are accepted.
Sales Comparison approach
The appraiser estimates a subject property's market value by comparing it to similar properties that have sold in the area. The properties used are called comparables, or comps.
The appraiser should be an objective third party; someone who has no financial or other connection to any person involved in the transaction.
The property being appraised is called the subject property.
No two properties are exactly alike, so the appraiser must compare the comparables to the subject property, making adjustments to the comparables to develop a range of value.
You will probably pay for the appraisal when you apply for your loan.
What You'll See on a Residential Appraisal Report.
The cost approach is most useful for new construction, where the costs to build are estimated. The appraiser estimates how much it would cost to replace the structure if it were destroyed.
Very detailed reports that include:
The appraiser estimates the land value and adds it to the replacement cost less depreciation. Depreciation is the loss in value considering physical, functional and external factors.