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One of the most beneficial things an appraiser provides is an unbiased opinion. Appraisals are completed to determine market value of real estate for a variety of purposes including, buying/selling, settling estates, divorce, tax purposes and many other purposes.

To provide unbiased opinion of value and assist people in making an educated real estate purchase decision or investment. An appraisal is for informational purposes and may be the most beneficial piece of knowledge in the home purchase decision. Banks order appraisals to learn the value of the home before making a decision to loan money against the real estate. Many people want an appraisal as a layer of protection and prevent them from unknowingly overpaying for a home. An appraisal provides a professional, third party, unbiased opinion of the home's value based on research and market data. Appraisers have extensive training and experience on market research and provide a professional opinion of value based upon their research.

The old saying “location, location, location” is always given significant consideration in an appraisal. Top priority in an appraisal is evaluating location, size, quality, condition and additional amenities (pools, shops, etc).

Age is also considered, but may be relative to condition. It’s worth noting that age plays a bigger role in new construction than in older homes. Each appraisal is completed by comparing the appraised house to other houses which have sold in the market area.

The appraiser will measure your home for accurate square footage and note its current condition, including obvious, significant deferred maintenance. As mentioned above in “factors considered”, the appraiser will search for closed sales most similar to your home. This includes homes most similar in size, located within the immediate market area, appear to be in similar condition and share as many of the same attributes as your home, including acreage, shops, pools, etc. Appraisers do not give weight to homes currently on the market or under contract. These may be included within the appraisal for support purposes, but the final opinion of value is arrived at by evaluating the closed sales selected.

The most ideal appraisal would be to compare your house with an exact replica, in the same condition, located in the same subdivision which sold yesterday. Unfortunately, these situations do not exist so the appraiser must find houses which have recently sold that most represent your house. Consideration is given to things such as quality, condition, size, features and amenities. This can include everything from the square footage of the house, number of baths, number of garage bays, school district, size of the lot, flood zone status, age and more. There are a number of things which must be taken in consideration when completing an appraisal. Though not each of these factors play a role in every appraisal, they must be considered and addressed if necessary. Each appraisal is completed by comparing the appraised house to other houses which have sold in the market area. If a property is located in a rural area or has unique features and amenities, the more likely it will be for the appraiser to expand the search area for best comparable (homes similar to yours). For example, If your home has a pool, it would be preferred to use a house which recently sold that also has a pool.

The most common definition used for market value is as follows:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale.

Appraisals are most often completed to determine an opinion of current market value, meaning these values will be seen as one in the same. An exception is when buyers bring cash to the table, paying over and above the appraised value to purchase a property.

One of the most important factors is condition. It is the job of an appraiser to compare your home to other homes in similar condition. Homes with significant deferred maintenance will be compared with other homes reflective of the same condition. Generally speaking, these homes sell for less than homes which have been well maintained. If you’re looking to improve value, ensure you have not overlooked needed repairs and updates necessary to be consistent with the local market trends. Appraisals are not home inspections and therefore are limited to readily observable conditions. However, if significant, obvious deferred maintenance is observed it will be considered during the appraisal. Be cautious not to improve your home beyond the typical market expectation or you may be disappointed in your return.

Appraisers determine market trends by studying sales within your market area which closely reflect features & amenities shared with your home. More unique homes may indicate a different market condition than more conforming homes (homes very similar to each other) within the same area.

Improving the overall condition of your home typically proves to be one of the most beneficial improvements to increase your home appraisal. If your home is in need of some updates and/or repairs, focus your time and attention in those areas for best results on your home appraisal. Simple appeal and condition updates can be very effective ways to maximize your return.

Be careful not to over improve your home as it will not yield the financial return that simple updates will yield. Over improvement refers to upgrading and/or adding features and amenities that the general market participants will not recognize as value. For example, a high end swimming pool will likely yield a better return in an area where the market expects a swimming pool as compared to an area where swimming pools are not typical or expected.

A very common mistake sellers make is advertising their home without knowing the accurate square footage. Many people advertise their home using the square footage recorded on the county records, not knowing the county records are often incorrect. County records serve a different purpose than an appraisal and are rarely as precise as an appraiser's measurements as the county rounds their measurements.

In some situations, a buyer purchases a home under the assumption the county square footage is correct, only to find out the square footage on record included the garage, an unfinished attic space, etc. This has cost some people thousands of dollars on re-sale. You can avoid this costly mistake by hiring Measured Home Services to provide you with an accurate square footage measurement of your home before you buy or sell.

When a house is listed on the market and compared to other homes with similar square footage, only to discover later the square footage was not accurate it may possibly completely change the comparable sales used to price the home.

Another common reason a home appraisal comes in low is when the list price of the house is determined by comparison with other homes that are not truly comparable. For example, using a significantly smaller house in the neighborhood to determine a price per square foot used to list a larger home. Generally speaking, smaller homes command a higher price per square foot. Using this as a guide for a list price of a larger home can be a recipe for disappointment.

The cost of an appraisal is a one time fee. Consideration is given as to the type of appraisal needed, availability of reliable market data, location and other features and/or amenities which may alter the complexity of the assignment. An appraisal fee is paid up front and is not related to the appraiser’s opinion of value reported.

Whether a licensed or certified appraiser performs your appraisal, Measured Home Services will ensure the appraiser is qualified. A certified appraiser is required for some specific loan types related to mortgage appraisal. One example is for an FHA loan. Most single family homes can be appraised by a licensed appraiser if not for mortgage loan purposes. More complex assignments, such as larger multifamily dwellings or FHA mortgage loans require a certified appraiser. Measured Home Services can answer your questions regarding the need for a licensed or certified appraiser.

An appraiser is looking at the overall quality and condition of the home whereas a home inspector is looking more in depth at the functional components of the home. An appraiser’s inspection is only what is readily observable and most items are assumed to be in operating condition unless led to believe otherwise based upon observation, research or instructed otherwise.

A home inspector is not providing an opinion of market value, but providing a report related to the specific function of each area of the house. The home inspector is checking for proper operation whereas the appraiser is noting overall features which may improve the value. For example, the appraiser may observe the central air conditioning is present and the house is cool, whereas the home inspector will check for the air temperature difference between the inside and outside of the home to verify its functioning to industry standard.

The most common reason an appraisal comes in lower than the asking price is due to using poorly selected sales to compare the house when determining a list price. An appraiser is looking for homes that are sold nearby and that represent your house as closely as possible.

If recent sales were used to price the house which were not an accurate reflection of your house, either in size, quality or condition, then those sales may indicate a significantly different value than a truly comparable sale.

Measured Home Services can advise you. The single biggest difference in appraisers are those who specialize in commercial versus those who specialize in residential. Residential appraisers typically provide vacant land appraisals too. Within residential appraiser certifications, a licensed appraiser is qualified to handle most assignments. If an assignment becomes complex, Measured Home Services will assign a certified appraiser.

USPAP is the standard for appraisal practices set by the Appraisal Standards Board. Appraisers are required to follow USPAP for all federally related transactions and further required to remain up to date with changes made every 2 years to the standard. The purpose of USPAP is to provide an ethical standard for completing appraisals and maintaining a high level of public trust in appraisal practice.

If you are getting a bank loan and the appraisal comes in lower than the contract price, you may ask your bank about their appeal process. The bank is the appraiser's client and all communication should be directed through the bank.

Appeals may be successful if the appraiser incorrectly reported factual information, such as the number of bathrooms the property includes. Mortgage loans are most often based upon the analysis and results of the appraisal, meaning the opinion of value reported by the appraiser will be the opinion of value used by the bank.

If you are working with a bank for a mortgage loan and unhappy with the results of the appraisal, you may ask your bank what their policy is for disputing the appraisal. When the appraisal is completed for the bank, the homeowner is not the intended user of the appraisal - the bank is the user. This means communication and appraisal disputes must be routed through the bank, not the appraiser.

Each bank has a different procedure for these situations, but typically you will need to present additional sales which you feel apply as better comparable than the sales the appraiser used in his report. The other thing to look for in these scenarios is for factually incorrect information within the appraisal, such as an incorrect number of bathrooms counted.

There are often two reasons why an appraisal would come in lower than expected:

1) The home was advertised using incorrect square footage. The county records are often used for advertising purposes, but are often incorrect. The difference may be subtle for many properties, but they will make a big difference the greater the variance. County records serve a different purpose than an appraisal and are rarely as precise as an appraiser's measurements as the county rounds their measurements. A buyer may purchase a home under the assumption the county square footage is correct, only to find out the square footage on record included the garage, an unfinished attic space, etc.

2) Another common reason a home appraisal comes in low is when the list price of the house is determined by comparison with other homes that are not truly comparable. For example, using a significantly smaller house in the neighborhood to determine a price per square foot used to list a larger home. Generally speaking, smaller homes command a higher price per square foot. Using this as a guide for a list price of a larger home can be a recipe for disappointment.

If you’re selling your home, make sure you have factually correct information for listing purposes. Sellers may be surprised to find the square footage reported in the tax records are not correct.

In these situations, the appraisal may come in lower than expected if the square footage measured by a professional appraiser differs significantly. In addition to advertising factually correct details, ensure you have addressed any significant deferred maintenance. Avoid having a home appraisal done while you have home renovations underway.

One of the single most influential factors in determining value during an appraisal is the condition of the home. It is possible for the appraisal to be done based upon future repairs/renovations at the client request. This is helpful if you are planning renovations and want to know the value after the work is completed. These appraisals simply include a hypothetical condition that repairs have been completed. Measured Home Services offers these appraisals as well.

The purpose of an appraisal is to provide a professional opinion of market value. Appraisers research sold home sales to determine a reasonable market value for your home. Many sellers use this appraised value for their list price. Getting top dollar for your home goes beyond having a good list price.

Finding a real estate professional in your area to provide quality marketing and assist with overall presentation will further help you get the most money possible. Appraisers assist with market value and realtors assist with marketing.

Appraisers are not valuing your cleanliness, but they are looking at conditions. Take time to finish up your home projects and address any obvious deferred maintenance. Homes under renovation (such as missing carpet and unfinished bathrooms) are unique for the appraiser as they are tasked with determining an “as is” value for the house in its current condition or must be provided with a list of repairs being done so the appraisal can be completed using a “subject to” value. “Subject to” appraisals give a value assuming all repairs/renovations have been completed. Determine which type of appraisal will be most helpful for your situation and discuss with a professional at MHS.

Most users only focus on the opinion of value. However, an appraisal includes so much more detail to assist the reader. They check things such as bathroom count and garage count to ensure the facts are correct. The appraiser will have measured the home for accurate square footage. Do not be surprised if the square footage differs from the tax records as the county records often are not as precise as an appraiser's measurements.

Also, read the commentary within the appraisal report. The report is simply that, a detailed report of the facts, research and results of appraisers analysis. By reading the commentary in the report, you will gain insight as to the reason the appraiser made adjustments and chose comparables he did. For example, you will find comments such as “the search area was expanded to 3 miles to find another home with a swimming pool”.

If you are working with a bank for a mortgage loan and unhappy with the results of the appraisal, you may ask your bank what their policy is for disputing the appraisal. When the appraisal is completed for the bank, the homeowner is not the intended user of the appraisal - the bank is the user. This means communication and appraisal disputes must be routed through the bank, not the appraiser.

Each bank has a different procedure for these situations, but typically you will need to present additional sales which you feel apply as better comparbales than the sales the appraiser used in his report. The other thing to look for in these scenarios is for factually incorrect information within the appraisal, such as an incorrect number of bathrooms counted, or a feature which may have been overlooked such as a detached shop or finished basement. If you hired the appraiser directly (not using appraisal for a mortgage loan) then reach out to the appraiser for clarification.

While all inspectors must meet the same basic criteria for state licensing, there's no substitute for experience. An inspector with over five years in the field should have conducted well over 1000 inspections. Don't hesitate to inquire about your inspector's experience and background.

Clients have the right to select their own inspector. Most realtors can provide a list of local inspectors for you to choose from. It's essential to make your independent choice and not feel pressured to use a specific inspector.

To ensure a thorough inspection, make sure that the inspector can access the attic, water heater, furnace, and the electrical panel. Clear out unnecessary items from closets, attics, and garages. Additionally, remove items from beneath sinks in kitchens and bathrooms, as this will facilitate a faster and more comprehensive inspection.

A good inspection report should include multiple photographs and clear descriptions of any issues that require attention. The report should also provide information to help you understand how to maintain the home. It should list the locations of shutoff valves, GFCI reset points, and air filter locations to assist you in managing your property effectively.