How are appraisals done?

by on May 11, 2009

I am asked many times how an appraiser establishes a value on a home so I thought I’d take a minute to answer that question.

The appraisers are directed to assume the house is vacant and on the market for 90 to 120 days.

The appraisers are instructed to evaluate the home in “as is” condition and further assume an all cash sale.

The method of estimating value is to compare your home to similar houses in the area which have sold recently and/or are presently for sale.

The appraisers are asked to analyze housing conditions in the area, as well as market trends and forecast their impact on the value of your home.

Everything is based on the idea that a prudent buyer will pay no more for a property than it will cost to buy a comparable house. It also assumes an informed buyer willing to buy and an informed seller willing to sell.

The effect of each of the instructions above is to apply downward pressure on the offer price for your house.

Obviously, this can be quite frustrating to a home seller as they want to get the most money possible on the sale of their home.

It’s great for a home buyer as they want to think they are getting a good deal or at least a great value for their money!

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