The Next Steps of An Appraisal
In this series of Appraisal Process Tutorials, we review the Residential Appraisal Process for real estate.
Tutorial 2: At the Property: The Appraisal Inspection
We have gathered and analyzed all the preliminary data necessary before going out to the site. In all the years that I have been appraising this is what I’ve considered to be the most fun part of the process, and in a way has always served me as a way to eliminate stress. Going out on the field, I get to drive a little, listen to some music, and get a little bit of sun.
Take Exterior Photos
Take exterior photos of the home (Street scene, Front view, Both sides, Rear view, and anything else that may contribute to or detract from value such as: lake front view, or commercial property next door.
Measure the Size of the Home
Measure the exterior of the home (All four sides to calculate the total living area). Make a sketch with all measurements written down. Label the interior spaces on the sketch.
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.
Take Interior Photos
Take interior photos of major rooms (Kitchen, Living Room, and Master Bathroom). Observe the condition of the property, which includes:
- Assessing 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.
Visit Comparable Sales
Drive the neighborhood and take the exterior front photos of the comparable sales selected
Go Back to the Office, Write the Appraisal Report
After having viewed the home, taken notes of its interior and exterior materials, upgrades, finishes, quality of construction, and condition, we do the same thing for the comparable sales. Then it’s finally time to get back to the office, and start putting all this information together, and still pull some additional data such as the zoning, plat maps, sales history reports for the subject and comparable sales, FEMA and/or Flood data, Tax data, and Census data.