Real Estate Appraisals: An Overview
Cory is a frequent writer of online property documents including property tax reports, deeds, liens and other public documents. He works for Courthouse Direct, an online resource for a variety of public court records.
An appraisal is a common experience shared by nearly every property owner, yet most people do not fully understand the property appraisal process. Before conducting a professional appraisal of your home or other property, be sure you understand exactly what is going to happen and what it means.
Defining Appraisals
The first step in understanding the property appraisal process is gaining a basic knowledge of what appraisals are. A property appraisal is a professional estimate of value based on an inspection and comparison to the sale price of similar properties in similar areas.
When Appraisals Are Done
There are a number of circumstances that require a property appraisal. The most common are loan refinancing, property sales, and estate planning situations like divorce or will preparation. The underlying purpose of the appraisal can directly inform the outlook of the process.
Appraisals done when refinancing or seeking another loan that requires information on your property holdings will look to provide a mid-range fair market value the lender is likely to recoup in the event you default on repayment. On the other hand, those done for the purpose of selling the property should evaluate the highest possible sale price based on the property itself and comps in the area. Be sure to accurately describe why you are initiating an appraisal of your property so the appraiser approaches the process with the right point of view.
Sharing Appraisal Information
The party requesting the appraisal of a property has exclusive ownership of the reported value and other details contained in the appraisal report. This can be a frustrating aspect of the appraisal process for homeowners who needed to pay for an appraisal out of pocket but are unable to view the finished report. The lender, or anyone else, who contracted the appraisal would need to provide official written consent before the information is shared with anyone, even the owner of the property.
When Appraisals Expire
An appraisal of your property has a shelf life and will not be usable forever. The appraisal of your property will expire exactly one year after the reported date of the physical inspection. If you need to reference an official appraisal of your property after that date has passed, you will need to commission an entirely new appraisal report. Information in an appraisal represents a moment in time, what was going on with your property at a specific time.
Property owners should understand what appraisals entail before the process begins. Know why you are getting the appraisal done to ensure an accurate assessment.