Appraisal FAQ

What is an appraisal?
What’s the difference between an appraisal and the assessed value?
Is an appraisal the same as a home inspection?
When should I get an appraisal?
How is an appraisal completed?
What will the appraiser do at my house?
What is Market Value?
What is GLA?

What is an appraisal?
An appraisal is an opinion of value supported by market evidence. It is an estimate of the worth of the property by an expert with the knowledge and experience to provide a credible opinion of value. Think of medicine and law. The medical doctor provides an expert opinion pertaining to health and illness. The judge renders an expert opinion regarding legal issues. Likewise, the real estate appraiser provides an expert opinion regarding property value.

What’s the difference between an appraisal and the assessed value?
There are similarities between the two, but the differences are significant. Nearly always, the purpose and the methodology of the individual appraisal versus the assessment are quite different. Also, the appraisal is usually a current opinion, whereas the assessed value may have been developed months or years ago. For most purposes other than taxation, it is hazardous to rely on the assessed value for property decision making.

Is an appraisal the same as a home inspection?
Not at all. The home inspector is investigating only the physical property. His concern is condition, defects, and hazards. The real estate appraiser is concerned with value. The appraiser must investigate many other influences on value in addition to condition, defects, and hazards.

When should I get an appraisal?
Appraisals are often requested for property transfers and financing. They should be considered whenever you are contemplating buying or selling property. They are also important for estate planning and estate settlement when property is inherited. Divorces often involve large property holdings that must be valued. Of course if you believe your property taxes are excessive you should engage an appraiser for an opinion of value.

How is an appraisal completed?
Simply stated, the steps in the appraisal process include: investigation of the subject property (usually includes onsite property inspection); market research; analysis of the researched data using appropriate appraisal methods; reconciliation of the evidence for a final opinion of value; communication of the appraisal conclusions in the form of a written report.

What will the appraiser do at my house?
The appraiser will look at the lot and house to make determinations regarding condition, quality of construction, functional utility and obsolescence. The appraisal inspection is not as intrusive as an inspection by a home inspector. Photographs and measurements are usually taken.

What is Market Value?
The most common definition is:
“Market value means 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 and 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:
buyer and seller are typically motivated;
both parties are well informed or well advised and acting in what they consider their own best interests;
a reasonable time is allowed for exposure in the open market;
payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
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.

What is GLA?
GLA is gross living area, the common measurement used in the appraisal of residential property. It is calculated by taking exterior dimensions of the building for above grade finished area. It does not include below grade space, whether finished or not. Below grade area is calculated and analyzed separately.