An Appraisal Inspection Happens at the Property
An Appraisal Inspection collects information that is used to determine the Market Value of a property in a real estate appraisal report.
Prior to the appraisal inspection, the appraiser will research information about the property and the neighborhood. Much of this research is done in the local MLS (Multiple Listing Service) on via other on-line sources, some of which are public and some of which may be paid subscriptions for access. This includes confirming that the property details (lot, block, street address, etc.) are correct. The appraiser must establish that the correct property (called the subject property) is being appraised.
The Appraiser Visits the Property
The appraiser will then visit the property to perform the appraisal inspection. This inspection will include the following basic steps:
- Determination of the square footage of the property by measuring the exterior dimensions of the home for a single-family residence). The calculated square footage will include all interior, conditioned space and will not include covered patios, balconies or walkways. The square footage of the garage will also be determined and reported, but is not considered to be part of the square footage of the home.
- Observation of the condition of the property, to assess if the property is in poor, fair, good or excellent condition. This observation step will include taking photographs to document the condition of the subject property. These photos will include, at a minimum, a street scene (a photograph taken looking down the street, i.e., through the neighborhood), front and rear elevations, and interior pictures of the kitchen, bathrooms, fireplace(s) and living spaces. When the appraiser is assessing the condition of the property, he or she is checking for conditions that could affect the value of the property.
- Verification of upgrades that have been provided to the appraiser that may support additional value.
- Notation of permanent elements or features that could affect the value of the property. This may include built-in cabinetry, built-in appliances, built-in BBQs, and other permanent items that may not be removed from the property. The fact that an upgrade cost a certain amount does not necessarily mean that the property value will have increased correspondingly.
- Notation of the size and condition of the basement, including whether or not the basement, or a portion of the basement has been updated or finished. Although updated basements may affect the value of a property, the basement square footage is not included in the overall square footage reported for the property. Basement value is calculated separately from the main level(s) square footage.
- Verification that the property has a furnace and that the furnace appears to be in working condition. Please note that this is not a furnace inspection of the type a home or HVAC inspector would perform. The appraiser needs to determine that the furnace turns on, not that it functions as intended, which is out of the scope of a property appraisal. If the furnace does not appear to be in working order, the appraiser will not that on his report and an additional furnace inspection may be required to confirm the furnace is in good working order prior to the lender making the loan on the property.
- Confirmation of the number of rooms contained within the property. A room must have a closet and a window to be counted as a bedroom.
After the Appraisal Inspection
After the appraisal inspection, the appraiser will use this information to compare this property to comparable (similar) properties that have recently sold (or are for sale) in the market area and will analyze the available market data along with the specifics for the inspected property to make his determination of market value in his real estate appraisal report.
The Full Monty: All of the Steps of an Appraisal
The appraisal inspection is only one of many steps in the overall appraisal process. Read our page on Appraisal Steps: Determining Market Value for the detailed list of the steps taken to determine the market value of property.
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