UNDERSTANDING THE DARK ART OF REAL ESTATE APPRAISAL
What Exactly is an Appraisal? It's simply an opinion provided by a disinterested, trained third party as to the value of a specific property on a given date. The process used is no different in the Mountain Home Idaho Real Estate market than in Los Angeles or South Bend.
Is An Appraisal the Same Thing As An Assessment? Although they're both developed using similar tools - there is a difference.
Appraisals are estimates of current market value and are generally done for purposes of mortgage lending.
Assessments are value estimates done by the County Assessor to determine a property's taxable value. Assessed values are usually much different (and be higher or lower) than market values. This is because they rely heavily on depreciated cost estimates instead of recent sales data. In addition, assessments may not include all of a property's amenities.
How Does the Appraiser Arrive at a Value Estimate? Primarily, by comparing the property being appraised to recent sales of other, similar properties. Ideally, the comparable properties will be similar to the Subject property in location, size, age, etc. Adjustments are made between the property under appraisal and the comparables. For example, if the property being appraised includes a 3-car garage while a comparable sale has only a 2-car garage, the appraiser might add $3500 to the sales price of the comparable to adjust for that difference. This process would be repeated for each significant difference between the Subject and the comparable(s).
What Can I Do If I'm Not Happy With My Appraisal? The place to start is by reviewing the appraisal report with your real estate agent. Many times the answer to your question is already in the report but that page wasn't provided you by the lender. If the answer isn't there, your agent can call the appraiser directly to discuss the issue and to provide additional information. Finally, the lender can communicate with the appraiser. Most appraisers will review new information but may not change their conclusions unless the quality of the data provided is at least as good as what they used in their original analysis.
Have questions regarding appraisals and how to ensure that your home appraises at top dollar? Contact me - I have 25 years experience as an appraiser in the Mountain Home area and will be glad to help.
Jan DeGiorgio - Associate Broker Century 21 Southern Idaho Realty Mountain Home, Idaho
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