Having
an idea in what is involved in a real estate appraisal can
greatly help in maximizing the appraised value and avoiding costly
details and re-inspections. The real estate appraisal process consists of several
steps. The following are the major steps in the sequence normally
followed by appraisers:
- Research the subject property as to size, bedrooms, baths, year
built, lot size and square footage.
- Gather data of recent real estate sales in the subject's neighborhood. The
appraiser needs to locate at least three preferably similar-sized
homes that have sold and closed escrow in the neighborhood. The
homes need to be within one mile of the subject and sold within
the past six months. These homes are considered the "Comparable
Properties" or "Comps" for short.
- Field inspection consists of two parts. First the inspection of
the subject property. Second, the exterior inspection of the
comparable properties which have been selected to estimate the
value of the subject property.
- The subject inspection consists of taking photos of the street
scene, front of the home and rear of the home, which may include
portions of the yard. The appraiser will make an interior inspection
for condition, noting any items that would detract from or add
to the value of your home. He will also draw a floor plan of the
home while doing the inspection.
- The inspection of the comparable properties is limited to an exterior
inspection. For features which cannot be seen from the street, the
appraiser has reports from Multiple Listing Services (MLS), California
Market Data Cooperative (CMDC), county public records, and appraisal
files along with other sources to help determine the condition and
amenities of the comparable.
Determining Real Estate Appraised Value
After the field inspection has been
completed, the appraiser must determine which comparable properties
most resemble the subject, making slight adjustments in value for
any differences between them. After
making the required adjustments, the appraiser must go through the
reconciliation process with the three comparable properties to determine
a
final estimated value. This method of estimated value is called
the "Direct Sales Comparison Approach to Value", and it
accounts for nearly all of the considerations in determining value
of single family property.
It is important to consider that the appraiser will be taking photos
of the street scene and of the front of the subject. The street
scene gives the lenders some kind of idea as to the type of neighborhood
in which the home is located. The photo of the front of the home
gives the lender an idea of its condition and its curb appeal. And
lastly, a photo of the back of the home and part of the rear yard
is taken. Many homeowners don't take care of the rear portion of
their homes and back yards, so for this reason the rear photo is
required.
In most cases, (over 90% of the time) what you see in the condition
of an exterior home will be repeated almost exactly in the interior.
So one of the most important things you can do is enhance the value
or perceived value of your real estate appraisal is to improve the curb appeal of your home.
An appraiser will call in advance to set up an appointment for the real estate appraisal of
your home. At that time, offer to supply any information about the
home size, number of bedrooms, bathrooms, pool, enclosed patio,
etc. The more that is known about the property prior to the appraisal,
the better the appraiser can focus on researching the most similar
comparable. "Doing your homework" will maximize your chances
of having a good appraisal.
While your home is being inspected, don't follow the appraiser from
room to room causing distraction. Instead, allow the appraisal process
to go smoothly. In case the appraiser has any questions, be close
by to answer them. The time to mention the things you think are
important is either before or just after the inspection.
Equal Housing Lender. © 2002 Kale Enterprise Corp. Trade/service
marks are the property of Kale Enterprise Corp and/or its subsidiaries.