What is an appraisal?
An appraisal is a thought process leading to an opinion of value. This opinion is made through a formal process that typically
uses three common approaches to value. These common approaches are the Cost Approach, the Sales Comparison Approach and the
Income Approach. The Cost Approach is what it would cost to replace the improvements plus the land value. The Sales Comparison
Approach involves making a comparison to similar properties, which sold in the nearby area. This is normally the most accurate
indicator of value for a residential property. The Income Approach involves estimating what an investor would pay based on the
income produced by the property.
What does an appraiser do?
An appraiser provides a professional, unbiased opinion of market value. This information is presented in a report that will
be used in making real estate decisions.
What is the difference between an appraisal and a home inspection?
The appraisal is an opinion of market value and a home inspection is a third-party evaluation of the accessible structure and
mechanical system of a house. The standard home inspector's report will include an evaluation of everything from the roof to
Who owns the appraisal report?
In most real estate transactions the lender owns the appraisal. While the homebuyer pays for the report, the lender retains
the right to use it or any other information contained within. The homebuyer is entitled to a copy of the report, but is not
entitled to use the report for any other purpose without permission from the lender. The only exception to the rule is when a
homeowner orders an appraisal directly.