COMMON QUESTIONS
Frequently Asked Questions
Common questions about real estate appraisals
An appraisal report is an evaluation allowing the appraiser to arrive at an opinion of value. The real estate appraiser will typically use several "approaches" to determine worth. The Cost Approach estimates what it would cost to replace the improvements, minus depreciation, plus land value. The Sales Comparison Approach involves searching for similar properties nearby that have sold recently and making adjustments to determine value. Usually, the Sales Comparison Approach is the most accurate indicator of residential property worth.
An appraiser provides a professional, unbiased opinion of market value used in making real estate decisions. A complete investigation is documented by the appraiser in a detailed report.
- To obtain a mortgage loan
- To reduce property tax obligations
- To remove Private Mortgage Insurance (PMI)
- To challenge inflated property taxes
- To settle an estate
- For an advantage when purchasing real estate
- To determine a fair price when selling
- To protect rights in a condemnation case
- When required by an agency such as the IRS
- When involved in a lawsuit or divorce
Home inspectors do not produce an opinion of value and do not use the same forms as appraisers. An inspection is a third-party investigation of the structure and systems of a home, from the roof to the foundation. An appraisal focuses specifically on determining the property's market value.
A Comparative Market Analysis (CMA) depends on superficial trends and provides a non-specific figure. An appraisal relies on specific comparable sales and includes neighborhood and construction analysis, delivering a defensible and careful analysis with a clear opinion of value.
The biggest difference is the person creating the report. A CMA is created by a real estate agent, while an appraisal is created by a licensed, certified professional who has made a career of valuing properties.
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