The Real Estate Appraising Process
By Evan Siegel
Certified Licensed Appraiser
“How does the appraisal work?” This is the most often asked question residential real estate appraisers hear from home owners at the front door step during the home inspection. There are a variety of factors that are considered in the appraisal process, including the inspection and the appraisal report in order to conclude a value of property.
The appraisal process begins with an inspection of the subject property. There are a number of different styles that appraisers have when inspecting the home. Common practice is to inspect the interior first. When inspecting the interior, the appraiser will walk around the home, sketching a floor plan, and observing the structure, condition, and amenities. Interior photos are often taken with the ease of today’s digital cameras. The appraiser should ask if there have been any recent improvements to the home.
The exterior inspection usually follows. During the exterior inspection, the appraiser will measure the perimeter of the home to acquire a calculation for the entire square footage. During the measurements, the appraiser will inspect the quality and condition of the exterior property. Finally, photos of the front, rear, and street are taken.
Once the inspection is complete, the appraiser will begin the report writing process. The appraiser inserts all the information collected at the inspection into the report. Then the appraiser will search in the Multiple Listing Service or tax records for similar homes in the subject’s area that have sold recently and compare them to the subject property. Some items of comparison are the location, lot size, square footage, room count, market condition, construction, style, view, condition, and amenities. Each property that is being compared will have value adjustments given to it for items that are not similar to the subject. After the comparison is complete, the appraiser arrives at a final value for the subject property based on the adjusted values of the properties that are being compared.
Real estate appraising has been listed in the top ten jobs in America in the 2006 edition of Money Magazine. The primary reasons are the availability of positions, flexibility of hours, variety of work, and the salary.
Evan Siegel, the author of this article, has also been quoted in the Wall Street Journal in the article “Refinance or Not?” With years of experience in the field of real estate appraising, Mr. Siegel owns and manages American Realty Appraisals which covers the entire state of New Jersey. You can contract Mr. Siegel at Evan@ARAppraisals.net.