Real Estate Blog

The Benefits Behind Real Estate Appraisal

Countless potential homebuyers question the value of certain properties that they have pursued to purchase. There are currently many tools that you can use online that can provide you an estimation of the property’s worth. If you are interested about certain real estate values, an experienced accredited appraiser can prepare a specific report that can present you with their professional expertise. A real estate appraisal is usually finalized within a few business days and no longer than that. Here are the many ways that appraisal information provides unique assistance throughout the industry of real estate:


When you plan to work with an appraiser, they will collect various documents and information so that they can complete a real estate appraisal report. The property will be physically inspected as well as the public records and many other techniques can be used to determine the value of the property within the real estate market. The data is often collected no matter who you are in the industry whether you are a home builder or a real estate agent. Once the real estate appraisal is completed, it will enable fellow users to see listed photos, amenities and other certain details about the property that can be seen as useful information if you are looking forward to this property or having to compare it with other locations. It will also allow users to analyze details such as property size, condition and final price for the sale.

A lender would usually order a real estate appraisal with some kind of risk-based decisions involved such as bank and mortgage lenders to determine if the property meets the standards of the underwriting of the loan. When a homeowner is looking for a large sum of a loan to refinance current mortgage payments, the guidelines that the bank lender would require the minimum appraisal value of no less than 30 percent of the total amount.

When it comes to home buyers, a real estate appraisal provides useful information for potential home buyers that are looking forward to negotiating for the lowest acceptable offer possible. Obviously home sellers want to get the best out of the offer and they would throw their asking price, expecting that is what their property is worth but you would be surprised how much a real estate appraisal can benefit you if you are looking to purchase a household in the nearby future.

There are many other purposes behind a real estate appraisal such as:

  • Tax entities to determine local property taxes
  • Determine the value of an estate
  • Divorce proceedings to determine value of assets through real estate
  • Lenders who issue secured loans
  • Protects the best interest of both parties (buyers and sellers)
  • Property Inheritance

There are three primary approaches when it comes to establishing a value of the property being appraised.

The Cost Approach – the value of the land with the estimated expenses to construct or replace a property as the depreciation is factored into the end result.

Sales Comparison Approach – an appraiser collects data such as prices through sales, condition of the estate and certain physical amenities from nearby properties that have been recently sold from the real estate market. Also known as the market data approach, estimated value by comparing properties that have been sold with the similar features. They would compare certain properties under these conditions:

  • Sold within the past year
  • Size of the location (number of rooms, landscaping, quality of design and construction)
  • Comparable features ( type of rooms, kitchen upgrades, fireplace, swimming pool)
  • Location of the property
  • Condition of the property

Income Capitalization Approach – establishes the value of commercial real estate and other types of income-producing properties that can be compared such as rental income and operational expenses. Also known as the income approach, it is based on understanding the information between the rate of return an investor can require and the net income that a property can produce.

It does cost money to have an experienced licensed appraiser to evaluate your current property and to be able to provide you the right information to tell you what your property is actually worth. While most home buyers are the ones to cover the appraisal fees in the sale of the property, in certain situations you can have the home seller choose to order their own appraisal. The appraisal can provide you valuable insights that can assist the seller with many opportunities to further add value towards the property being sold.

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