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The Appraisal Process: A Method to the Madness

The steps taken to determine the Fair Market Value of a property are nearly universal among real estate appraisers. Although each property we evaluate is different from the next, the steps for the typical piece of property are very similar. These steps include standard processes, market and subject research, and reporting. The only difference in the appraisal process is determined by how complex the property is to appraise. A complex assignment may require additional research and reporting requirements to fully reveal the market influences on value.

The Appraisal Workflow

  • Step 1 – Define the Assignment Conditions
  • Step 2 – Define the Scope of Work
  • Step 3 – Data Collection & Analysis
  • Step 4 – Application of Approaches to Value
  • Step 5 – Reconcile the Value Indicators
  • Step 6 – Report the Opinion of Value


Discussing Your Appraisal Needs

The first step of the appraisal process is to know exactly what our client needs to achieve with their appraisal. There are several different types of appraisal services we offer, each varying in level of reporting. There are also 100+ different appraisal forms to report on; selecting the correct one is dependent upon your use. For instance, banks and lenders almost always require the report to be delivered on a government promulgated form – commonly the FNMA 1004 for full appraisals and FNMA 1075 for exterior-only appraisals. Sometimes the lender may require additional forms for special conditions. We would need to be aware of this prior to starting the assignment so we can deliver the correct reports.

Depending on your situation you may not need a full appraisal; a desktop or exterior only may serve your purpose. Likewise, we need to know if there are any special conditions we need to include in the report. These are the types of questions we must answer before we determine the best solution for you.

Schedule Your Appointment

Once we’ve determined exactly what type of appraisal you need and how you need it reported, we then place you in contact with one of our staff appraisers. They will work with you to schedule your site visit on a day and time that works best with your availability.

The Site Visit

If a site visit is needed, your appraiser will typically arrive within 15 minutes of your appointment. While it is not necessary for the home to be spotless or appear uninhabited, it is appreciated if you take certain steps to ensure the appraiser can perform his job quickly and efficiently.

  • Make sure all rooms, storage areas, garages and outbuildings are accessible
  • Make sure all pets are crated or can be easily relocated when the appraiser needs access to the back yard
  • Make sure all sides of the house are easily viewable
  • It’s preferred for no vehicles to be parked in the driveway (license plate/privacy concerns)

During the site visit the appraiser will start by examining the exterior of the home. He/she may also take measurements of the exterior to confirm living area.

Once the exterior has been viewed, the appraiser will come back to the front door and begin the interior inspection. The appraiser will go room to room, taking photos and notes of each. The majority of the photos taken are simply for reference when writing their report. The typical photos included within the report are kitchen, living area and master bath.

If the home is multi-story, the appraiser may need to take measurements from the interior as well to calculate areas above the first floor. The appraiser will make note of the location of any attic or storage spaces that are not living area.

Once these processes are completed, the appraiser will be ready ask and answer questions regarding the appraisal. The entire site visit can last anywhere from 20 minutes to an hour depending on the size of the home.

Report Writing and Delivery

After the site visit, the appraiser will take all the data collected back to the office and begin the report writing process. This typically takes 2 business days to complete, but sometimes longer on more complex properties. Once finished, the appraisal report is sent out to the client via email as a full color PDF file.

What DOES A HOME Appraiser Do Step-by-Step

So what exactly do real estate appraisers do?

Prior to the Property Site Visit:

  1. Download all the data on the subject property to be appraised.
  2. Research active, pending, and closed sales within the market area over the last 12 months.
  3. Determine what level and type of reporting is required for the assignment.

During the Property Site Visit:

  1. Take exterior photos of subject, including a street scene that shows the general character and condition of the neighborhood.
  2. Measure exterior of home if required for the assignment.
  3. Take interior photos of subject, including photos of the kitchen, bathrooms and living areas.
  4. Ask the homeowner any questions that come up during the site visit or during subject research
  5. Answer questions the homeowner or client has about the appraisal

After Visiting the Property:

  1. Research general data for neighborhood
  2. Pull specific market data for comparable sales. Comparable sales are properties that have characteristics that are similar to the subject property.
  3. Begin reporting process.
  4. Upload photos.
  5. Pull and upload plat map. The plat map shows the boundaries of each property and how they are oriented relative to each other.
  6. Pull and upload zoning map (when available).
  7. Pull and upload location map.
  8. Pull and upload Flood map.
  9. Enter sketch (the diagram of the house) into sketching software to calculate square footage.
  10. Confirm the Legal description of the property – usually (in Texas) defined as Lot X, Block Y in Section Z of Subdivision G, where X, Y, Z and G are the specific detaisl for the subject property. This information and the plat map make certain the subject property is the one being appraised.
  11. Read the sales contract information if the appraisal is for a purchase transaction.
  12. Write neighborhood description.
  13. Write market description
  14. Write the site description
  15. Write a description of Improvements
  16. Use the Sales Comparison Approach.
  17. Make adjustments to the comparable properties to account for differences compared to the subject
  18. Analyze previous sales/transfers of the subject property.
  19. Apply the Cost Approach to arrive at an additional determination of value.
  20. Apply the Income Approach if this is an investment property.