We often hear a borrower say “The appraiser was only at my house for 20 minutes. I paid hundreds of dollars for that -what did the appraiser even do?” Great question!
So, how is the value of your property determined? This is an understandable question because most of the appraiser’s work is completed in the office doing research.
The appraiser will research the market area to determine if property values are increasing, decreasing, or remaining stable. They need to know neighborhood trends and what the current inventory of available housing is. They research public records to obtain information on the property and to ensure it complies with local zoning, among other things.
During the visit to the property when the appraiser completes their inspection, they will physically measure the property. This is where the GLA is obtained-NOT from public records or the tax assessor. The appraiser must measure the property themselves and report their measurements in an interior appraisal. During the inspection, the appraiser will note materials in each room, condition of everything, any amenities, any external items that impact value (i.e., RR tracks behind the house, a gas station across the street, view of the ocean.)
Once the appraiser has inspected the property, they will search for comparable properties through the MLS and other local data sources. These properties will be as similar as possible in regards to design, GLA, room count, condition and amenities. They may also talk to local real estate professionals active in the market. Once comparables have been selected, the appraiser must drive by each of them to observe any influences that will impact value.
2 properties are rarely exact matches and the appraiser is typically limited to what has sold within the last year, so the appraiser must adjust for any differences the market shows impact value.
Once all of the research is completed, the appraiser will complete the appraisal report and develop their opinion of value.