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 Home Buying Help 
Real Estate Appraisal


Real Estate Appraisal

Learn how to save money by selecting a competent real estate Appraiser and using their important valuation and consulting services for your benefit.

What is a Real Estate Appraisal?

As part of ensuring the loan, banks require an appraisal. An appraisal is different from a home inspection. Appraisals are for lenders; home inspections are for buyers. Your lender does an appraisal for three reasons:

  • Estimate the value of a house
  • Make sure that the house meets minimum health and safety standards
  • Make sure that the house is marketable

An appraisal of real estate is an estimate of value (usually in report format) as of a specific date and time. A third party who has no present or future interest in the property being appraised develops it. The opinion of value is supported by confirmed market date obtained by licensed or certified Appraisers who conduct specific research, compile relevant locational and economic statistics, reconcile the date, and analyze current trends as they relate to typical buyer and seller responses in the marketplace.

Appraisers must meet strict standards of professional appraisal conduct established by the Uniform Standard of Professional Appraisal Practice as developed by the Appraisal Standard Board of the Appraisal Foundation. These standards are widely recognized state and federal regulatory authorities, lending institutions, private capital investors, the judiciary, and the consumer advocates. The Appraiser who completes an appraisal assignment should be familiar with the market where the property is located, and be properly educated, trained and experienced in the application of real estate analysis and valuation techniques. In choosing an Appraiser, you should be selective, looking not only for a state licensed or certified Appraiser, but also one who holds membership in a professional appraisal organization. Appraisers who belong to these organizations often exceed minimum requirements for knowledge and expertise and usually specialize in areas of residential, commercial or personal property valuation.

Although the definition of "value" can change, it should not be confused with the "cost" of something. Market value (in general terms) is most often understood as being the most probable price which a property should bring in a competitive and open market under all conditions required for a fair sale. Both buyer and seller are to be well informed or well advised, and acting prudently in their own best interest, and assuming the price represents normal consideration for the property sold and is unaffected by undue motivational factors, influences of duress, creative financing or sales concessions granted by anyone associated with the sale.

Legal Uses of Appraisals

Appraisal services are most often used in situations involving transfers of real estate ownership as occurs in a sale, for estate settlement purposes among heirs as in probate matters, or by attorneys and the family court in divorce agreements. Appraisal services are also used by accountants for asset management and financial planning, or when real estate is pledged as collateral for a loan agreement such as construction loans to land developers. In all of these instances, the purpose of the appraisal is to establish an unbiased opinion of value in the Appraiser’s best judgement.

Other uses of appraisal services include:

Are your property Taxes Too High?

Real Estate Tax Abatement. An appraisal can either confirm or contradict the current assessed value and verify the accuracy of subject property data.

Stop paying PMI

The appraisal is used to confirm the existence of an equity position of 20% or more.

Buyer-Seller Negotiations

Determine a realistic Asking Price. The appraisal can help establish the current lendable value of real estate and assist sellers in negotiating the highest price reasonably obtainable from the marketplace.

Buyer Assistance. The appraisal can also be utilized by financed buyers, cash buyers, and investment partners as a Purchase & Sale contract provision to establish that a fair price is being paid.

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