Appraisal Home Valuation by a Licensed Real Estate Appraiser
This is the most comprehensive and accurate home valuation method, and is generally required by lenders as a condition of loan underwriting and final loan approval, even on refinance loans.
If a seller and their real estate agent cannot agree on a home’s true market value, it is also one way to arbitrate the differences. This helps to determine the most accurate and appropriate initial asking price, to meet the seller’s primary goal of getting the best possible sales price within a reasonable amount of time on market. If the initial asking price is not accurate, the property may sit on the market for an extended time, with little or no showings, or it may be under priced, and not yield the maximum possible net proceeds to the seller. Either case is bad news!
A pre-listing appraisal is highly recommended for very high value custom homes, and for special types of properties, such as farm and ranch with acreage and water rights considerations, multiple family dwellings such as a four-plex, other investment properties, and commercial buildings of any type. In the case of investment properties, a comprehensive cash flow and long term investment analysis may be included in the appraisal. In some situations, such as divorce property settlements or partnership dissolution, the appraiser may need to establish a market value as of a particular starting time, and a second market value for the present, in order to determine property appreciation during the marriage or partnership. Most real estate agents will not have the knowledge or experience required to perform an accurate market valuation for these kinds of special properties and situations.
In addition to all of the same research and actions a real estate agent would perform for a Detailed CMA, the appraiser will personally measure the property, and will not rely on the county assessor’s measurements. They will measure the lot, and will assign separate values for the lot and the improvements (buildings). They will take photos of the subject property and all comparable properties used in the appraisal. If they are appraising a potential investment property, market rents, depreciation and other factors will be researched and considered. They will apply their judgment and standard valuation factors, based on their own experience and rigid appraisal standards. Finally, they will prepare a formal written appraisal report, using a standard format as specified by various federal government agencies.