Frequently Asked Questions
What is an appraisal?
What is an appraisal?
An appraisal is a visual inspection, measurement (sketch) and a general assessment of a home, analyzed with the use of nearby comparable sales. It is conducted by a licensed or certified appraiser. While an appraiser will visit a home in person, the majority of the work will be done in their office. The appraiser will measure the home and compare the home’s features, lot size, square footage, location and amenities with other recent comparable sales in the neighborhood. Based on all of the information gathered, the appraiser will write a report to determine an opinion of value. The goal of an appraisal is to provide an unbiased opinion in determining the fair market value of a property. An appraisal is a legal document that is signed by a license or certified appraiser.
How much does it cost for an appraisal?
The cost of an appraisal is based on several factors. These factors include: the square footage of the property, where the property is located (city), the property’s lot size and other criteria (views, basements, backs to a busy street or commercial property, etc). All of these play a part in determining the cost of an appraisal.
Zillow vs Appraisal: How accurate is the "zestimate"?
The Zestimate’s accuracy depends on location and the availability of data in an area. Some areas have more detailed home information available — such as square footage and number of bedrooms or bathrooms — and other areas do not. The more data available, the more accurate the Zestimate value will be.
The Zestimate is not an appraisal and it should only be used as a starting point. We encourage buyers, sellers and homeowners to supplement the Zestimate with other research such as visiting the home, getting a professional appraisal of the home, or requesting a comparative market analysis (CMA) from a real estate agent.
Zillow vs. Appraisal: Is "zestimate" close to appraisal?
The Zestimate is not an appraisal and can't be used in place of an appraisal. It is a computer-generated estimate of the value of a home today, given the available data. The Zestimate should not be used as the basis of any specific financial transaction because data sources may be incomplete or incorrect.
What does an appraiser look for in a home?
- Type of house. This can refer to a single-family home, a townhouse, a unit in a condominium complex, a mixed-use space, or something else entirely.
- Design and style. An appraiser will consider the architectural style of the home. Think modern, ranch, craftsman, colonial, mid-century, and so on.
- Build year. The age of a home can influence value, if it’s a new construction or historic.
- Construction materials. Here’s where the appraiser notes everything from siding (brick, vinyl, concrete, composite…) to flooring (hardwood, title, carpet, laminate…), to trim and wainscoting (wood, plastic, metal…).
- Square footage. How large is the home?
- Number of bedrooms.
- Number of bathrooms. Full baths and half baths both earn credit.
- Foundation type. Appraisers look at whether a home is on a slab, has a crawl space, or a full basement.
- Basement details. If the home does have a basement, an appraiser will take into account whether the space is finished or not.
- Attic details. Likewise, if the home has an attic, the appraiser will evaluate the size and condition of the space.
- HVAC details. How is the home heated and cooled? Age of the system?
- Car storage. This refers to proper parking areas. Garages (attached or detached), carports.
- Appliances. An appraiser will take note of present appliances, which may include: refrigerator, stove/oven, dishwasher, microwave, type of water heater (tank or tankless).
- Features and amenities. Home improvements, interior upgrades, outdoor spaces (porches, patios, balconies), pools, detached buildings for storage or workspace, and more.
Solar Panel Systems [owned or leased]
When you buy solar panels, whether it be with cash or through a solar loan, you are the owner of the solar panels.
It should be noted that if you purchase the solar panels with a solar loan you cannot be given value of the solar panel system until the entire loan is paid in full. The loan company still owns the panels until the note is paid off. In these circumstances the appraiser cannot give value of the solar panel system in the appraisal since they are not owned by you.
With a solar lease or solar power purchase agreement (PPA), you don’t have to pay any upfront costs to install solar panels on your roof. Instead, a solar company installs and owns the solar system. You get to use all of the solar power that your system creates, which cuts down your utility bill with net metering. In exchange for using solar energy, you pay a monthly lease payment to the solar company. Oftentimes when you sell your home, your lease can be transferred to the new homeowner. Please be sure to check with your solar panel company for details regarding lease transfers.
Since there is a lease (much like a car lease) you don’t own the solar panel system and the appraiser cannot give value of the solar panel system in the appraisal since they are not owned by you.
What not to say to the appraiser...
“Use these sales, they are the best comps for this house” - There is a fine line in providing comparable sales to the appraiser. A true comparable will bracket the sales price of the home, meaning that there will be some that have sold for lower than the contract amount and some that have sold above the contract amount. By all means, if you have used certain sales to come up with your listing price, provide them to the appraiser but don’t just provide the ones that sold for the highest amount.
“Give me the best appraisal you can” - Appraisers interpret this as “give me the highest value you can”. Believe me, appraisers attempt to provide the best and most accurate appraisal possible. As an unbiased third party our goal is to provide the best appraisal possible that reflects current market behavior.
“Can you not take a picture of that hole in the wall?” – By excluding negative aspects of the property the lender may get an unrealistic picture (literally) of the home. Appraisers are asked to take pictures of the outside of the home as well as the interior and any repairs that need to be made. If we exclude any of these items then we could be accused of trying to hide something from the lender and we could be removed from their approved appraiser list.
“Can you leave out the recent foreclosures and short sales?” - By asking for these types of sales to be excluded you could be accused of trying to direct the appraisal value in a certain direction. After careful analysis the appraiser will determine if the short sales and foreclosures accurately reflect current market behavior in the neighborhood. If it does, they will be included, if not, they won’t.
“Let me know if it comes in low, ok?” - Well, appraisers really cannot tell anyone but their client what the appraisal comes in at. In a mortgage loan appraisal the lender is the client, and the appraiser cannot disclose the appraised value to anyone but them.
Why are photos of my home required?
Photographs are an important part of documentation and a requirement that the lender has expanded over the years. It used to be that appraisers would only need to include pictures of the front and back of the property as well as street scenes, but now this has expanded to include much more.
Any item that adds to or takes away from the value of your home is fair game to have its picture taken. The items an appraiser takes pictures of can vary from things within the house and outside of the house to things that are located next to your house.
Below are a few examples...
Description of improvements
Appraisers take pictures of the various rooms in a house as a way to describe the property being appraised. Pictures can give the readers of the appraisal report, such as loan underwriters, a better understanding of what the various rooms in the house look like including their condition. Pictures, in conjunction with the floor plan sketch, helps to provide a more complete description of the improvements and provide support for the final opinion of value.
If a home has special features, such as a built-in entertainment center or detailed crown moldings, this can add value. Including pictures of these special features is the best way to document them and support conclusions that you arrive at within the report. Pictures can also help add support for quality adjustments between the subject and sales and can add credibility to the appraisal report.
Most appraisals are made with the property in “as is” condition and including pictures of items that require repair will paint a better picture of the property. Appraisers reconcile the final value of the home after making adjustments to the sales used in the report. The final value typically lies within this range. Including pictures of where the home may need repairs can add support to the part of the value range that was reconciled. The more complete an appraisal is with written documentation and photographs, the stronger it is.
Attic and crawlspace
Appraisers who perform FHA appraisals are required to perform at a minimum a head and shoulders inspection of both the attic and crawlspace. To prove this was done, the appraisal must contain pictures of the attic and crawlspace. These pictures can show potential problems like prior fire damage in the attic or settlement cracks in the basement.
External factors include things outside of the boundaries of the subject property. An example of this would be a property located adjacent to a commercial business that has high traffic or noise - this external factor would have a negative effect on the marketability of the property. Including pictures of the business in the example above would help to inform and educate readers of the report so they understand why the appraiser came up with the value they did.
Updates, renovations, or remodeling
Have you spent thousands of dollars on updates, renovations, or remodeling? If you want credit for it then you’ll probably be gung ho for the appraiser to take as many pictures as they want in order to add support to their final opinion of value in the appraisal report. Again, adding pictures can help the reader of the report understand why the final value was chosen.
When the appraiser takes pictures of your house it is because they are collecting evidence to support the final opinion of value they arrive at for the bank, or to support a value. Don’t think of it as an intrusion of privacy since no one except for the lender and/or owner see the report. The more value related features your home has, either in a positive or negative way, the more pictures will probably be taken.
How long is an appraisal good for?
There is no concrete answer to how long is an appraisal good for. Different loan types vary on how long an appraisal is used for lending. Technically, appraisals don’t expire, but lenders may refuse to honor them if they think the appraisal is “too old”. Most appraisals will be accepted for 90 days and many for up to six months. However, rapidly changing market conditions can reduce the time frame to as little as 30 days. Good news? Appraisals can be updated or recertified, avoiding the need for a new appraisal.
FHA appraisals are normally valid for 120 days, unless some circumstances might require an extension or updating of the original appraisal. Even so, the appraisal cannot be valid for more than 240 days.
What is "green appraising"?
Green appraising refers to the different elements and processes that go into what is a green building or home. The Appraisal Institute defines a green building below.
Green Building: The practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building’s lifecycle from siting to design, construction, operation, maintenance, renovation, and deconstruction. This practice expands and complements the classic building design concerns of economy, utility, durability, and comfort (US EPA). High Performance building and green building are often used interchangeably.
What are the elements that make up a green building? The Appraisal Institute defines the elements of a green building below.
A green building has attributes that fall into the six elements of green building known as (1) site, (2) water, (3) energy, (4) materials, (5) indoor environmental quality, and (6) maintenance and operation. The energy and water elements are the most measurable elements of green or high performance housing. Appraisers need savings amounts to develop an income approach to support energy efficient contributory value.
The Appraisal Institute provides the following resource to appraisers when appraising green properties.