Appraisals 101

WHAT IS A REAL ESTATE APPRAISAL?

To put it simply, it is an opinion of what the appraiser believes real estate to be worth on the open market. Could it sell for more or less? Of course. But the idea is to determine a defensible market value for the client.


WHAT IS A "MARKET VALUE OPINION"

A market value opinion is what the appraiser believes a property is worth to a typical market participant in a typical marketing time and under typical conditions with all parties acting in their best interest.


HOW DO YOU DETERMINE THE VALUE?

Generally speaking, the appraiser will analyze the details of the home being appraised and compare it to others in the area. This includes, but is not limited to, the quality and conditions of the home, size, room count, basements, garage space, lot size, view, and more. Most lenders prefer to use the most recent sales when possible and rarely allow using sales that are more than a year old.


WHAT ABOUT MY BASEMENT?

This is a very common question. A home's square footage is determined by the above grade living space. A basement is always a basement, whether it is finished or not. Even a walkout basement is still a basement. This is all due to the way lenders view the square footage of the home. Having said that, it does not mean that finished basements have no value, they simply do not make your house "bigger".


ISN'T A HOUSE WORTH WHAT SOMEONE WILL PAY FOR IT?

This is an important one, especially in today's market where homes have been selling the moment they are listed. Appraisers are tasked with determining the market value and sometimes that doesn't match the sales contract. What now? That is the problem appraisers aim to solve. If the contract is higher than the market price, the buyer may need to renegotiate the asking price or restructure their loan process in order to meet lending guidelines. 

Joe Jenkins

Certified General Appraiser

Joe has years of experience in residential and commercial appraisals in Central Ohio.  Having worked for himself and other appraisal firms, Joe's overall industry and market experience is invaluable to the organization.