Real estate appraisal is not something that every person has an intimate knowledge and understanding; yet many people will have to deal with an appraiser or appraisal at some point in their lives, especially if they want to buy a home, lease or purchase a commercial property, or buying a business.
Like any professional field, real estate appraisal is subject to its share of myths. For those that are hiring an appraiser or will be in some way involved in the process, it’s important to understand what’s true and what isn’t. Here are a few things people believe about real estate appraisals that are not true:
The Appraiser Determines the Price of The Property
The job of an appraiser is to determine the objective market value of a residential or commercial property based on the condition of the property, among other factors. This does not mean it will sell for this exact price. A motivated buyer may pay much more than the appraised value, or the seller may let it go for less. A lot of investors and market participants also think of appraisals as “top dollar” for a property. But an appraisal is actually not top dollar, the mean, or the median, but actually the Mode – the number you would hear the most from knowledgeable buyers and sellers.
Appraisals are Just About the Structure Being Sold
An appraisal is about far more than just the size and condition of a structure or piece of property. For example, you could have two homes that are completely identical in size, layout, age, and condition. But put them in two different neighborhoods and you could end up with two very different numbers. Factors that you have little to no control over – schools, demographics, surrounding uses – could have a major impact on the appraisal.
Appraisals are Easy and/or Simple
If you watch a professional complete the onsite appraisal inspection portion of their job, you might come away thinking it’s a quick and simple process. That is not the case. It’s a complex process that involves many additional hours after the inspection portion. There are many factors to consider and is rarely as simple as just identifying comparable properties. The appraisers research market conditions and sale comparables and rentals, assemble a report, write a report, and reconcile to a final market value opinion. The appraisal report is actually NOT the appraisal. The appraisal is the opinion of market value by a certified appraiser after the appraiser has completed the appraisal process under a defined scope of work for their client. Thus, the opinion is developed and then the opinion is reported in an appraisal report.
Additionally, some believe appraisals are as simple as price per square foot. As we discussed in the last section, there are many factors behind just the size of a structure that determine the result of the appraisal.
Rather than being easy and simple, the world of real estate appraisal is difficult and complex. If you are in need of an appraisal, trust the experienced professionals at Atlas Valuation in Auburn, AL to get the job done right. Our well-trained specialists have experience in both residential and commercial real estate. Call (334) 737-6993 to learn more about our services today.