What Is a Real Estate Appraisal?
Understanding the Valuation Process
A real estate appraisal is an unbiased, professional estimate of your property’s market value. Certified appraisers assess your home’s condition, examine its features, and compare it with recent sales to arrive at a fair value you can trust.
What Is a Real Estate Appraisal?
A real estate appraisal is a professional, unbiased opinion of what a property is worth in the current market. Lenders order appraisals to ensure the loan amount is in line with the home’s value, while buyers and sellers use them to gauge whether a listing price is fair.
Inspection and Property Analysis
An appraisal begins with a thorough inspection. The appraiser measures the home, notes the number of bedrooms and bathrooms, and observes features and condition—from the floor plan and square footage to upgrades or obvious defects. This careful look helps determine how the property compares to others in the neighborhood.
Approaches to Value
Appraisers combine several approaches to estimate value. The replacement‑cost approach looks at local building and labor costs to calculate what it would cost to construct a comparable home today, setting an upper limit on value. The sales comparison approach analyzes recent sales of similar properties in the area, adjusting for differences like extra bathrooms or special features to arrive at a market-driven figure. For rental properties, an income approach evaluates value according to the potential rental income the property could yield.
Arriving at a Market Value
By synthesizing data from these approaches, the appraiser arrives at an estimated market value. This value serves as a reference point—the actual sales price may still rise or fall based on negotiations or special circumstances. However, lenders rely on the appraisal to avoid financing a home for more than it’s worth, and clients use it to make informed buying, selling and refinancing decisions.