Appraisal FAQs

John Cirincione, the National Chief Appraiser of Mortgage Information Systems, answers some of your questions about appraisers.

How Appraisals and Appraisers Work

Q: Why should I hire an appraiser?
A: The simple answer is to find out how much your property is worth. But a certified appraisal also can help with other matters, including taxes and eliminating private mortgage insurance. A licensed appraiser can also help you with estate planning, analyzing the feasibility of proposed improvements, determining the best use for a property, and with insurance valuations.

Q: How does an appraiser come up with a value?
A:By analyzing market data, including both historic and current comparable sales, current offers, pending sales, and proposed improvements. Then the appraiser compares your property to the broader market. The process may vary depending on why it is being done; for instance, an appraiser might weigh different factors more heavily for an insurance valuation than for a market valuation.

Q: Where does an appraiser get this information?
A:From a wide variety of sources, including a local Multiple Listing Service, local real estate professionals, county courthouse records, private data vendors, interviews with owners, and his or her own personal knowledge. The quality and reliability of each piece of information is weighed by the appraiser.

Q: How long is an appraisal good for?
A:Although there is no fixed expiration date on an appraisal, most lenders consider them outdated after six months.

Q: If I have five appraisers appraise my home will they come out with five different values?
A:Probably. If five prospective homebuyers made offers on the same property, they would likely have five different offering prices. Therefore, it is common for different appraisers to calculate different values, although they should all be within a reasonable range, assuming each was completed at the same time and under the same conditions. On the other hand, different appraisal techniques could result in markedly different valuations. For example, a complete appraisal that includes an interior inspection might vary from a drive-by appraisal, which wouldn't provide accurate information about the updates, features, or condition of a property.

Q: I think that the appraiser made a mistake when he measured my home. Who should I contact?
A:Either the lender or the appraiser.

Q: Can the appraiser talk to other people about my home and the reasons for my appraisal?
A:No. The relationship between an appraiser and client is bound by confidentiality.

Q: Are there any professional appraisal organizations that an appraiser may belong to?
A:There are many professional appraisal organizations. Membership in one isn't required, but it may demonstrate an appraiser's commitment to continuing education and ethical standards. Some organizations, in fact, have standards that exceed those set forth by state licensing boards.

Q: Who do I contact if I have a complaint? Are there any licensing or governing boards that oversee appraisers?
A:If you have a complaint, the licensing or regulatory board in your state is in charge of investigating the issue.

Q: Does the appraisal serve as a home inspection also?
A:An appraisal is generally not the same as a home inspection. Although the appraiser documents condition and construction, the appraiser is typically not performing the function of a home inspector. However, some appraisers may offer a home inspection service also.

Appraising the Inside of Your Home

Q: What does the appraiser look for inside my home?
A:Typically, an appraiser needs to document the condition of the interior, from the layout and features to any updates and construction. This information assists the appraiser in the valuation and comparison process.

Q: The appraiser only spent ten minutes in my house. How can he or she estimate a value in such a short time?
A:A physical inspection is usually only a small part of the overall appraisal process. How long it takes depends on how big and how complex your home is. Still, if you have concerns regarding the thoroughness of the appraisal inspection, contact your lender or the appraiser.

Q: How does the appraiser determine the square footage of my home's living area?
A:Generally, by measuring the exterior of the home. Non-living areas, such as garages or covered porches, aren't included.

Q: Does the appraiser include my finished basement in the appraisal?
A:Finished basements are generally calculated separately from the above-ground living area. The local market will dictate the contributory value of the finished basement, which can be influenced by government regulations, the quality of the finish, and other factors.

Home Improvements & External Factors

Q: Does an appraiser include my above-ground pool or my shed in the appraisal?
A:The appraiser generally considers only permanent fixtures and real property. Because many above-ground pools and small sheds are not permanent structures, they usually aren't included in the analysis. Depending on the specific installation process, however, an above ground pool or small shed might be considered part of the real estate.

Q: What improvements add the most value to my home?
A:How much any particular improvement will be worth to your home's market value, what appraisers call the contributory value, varies from market to market, driven by the wants and needs of each neighborhood. However, a local appraiser familiar with your market can help you figure out the best home-improvement value.

Q: If my neighbors fix up their home will my property value go up?
A:Maybe, but the impact of neighborhood property improvements also varies widely from market to market. Again, consult with a local appraiser.

Q: I have the biggest house in the neighborhood. If the appraiser users other home sales in my neighborhood for comparison, will that make my appraised value less?
A:Not necessarily. The appraiser will consider all relevant real estate data in the area. But when analyzing other recent sales, the appraiser generally will look for the homes most comparable to yours in terms of physical characteristics and the appeal of the location. In other words, the sales in your neighborhood might not make for the best comparisons if those homes are significantly less appealing. The appraiser may determine that the best for comparison home sales are in another neighborhood.

Appraisals & Refinancing

Q: I am refinancing my house with a local bank. If my bank appraisal comes out higher than my tax value, will my taxes go up?
A:They shouldn't. The bank appraiser is expected to maintain confidentiality with the client, which in this case would be the bank, not the local tax authorities.

Q: I recently refinanced my house. Am I entitled to a copy of my appraisal?
A:That depends on the bank, which in most cases is considered the client for the appraisal. Contact your lending institution with any questions about valuation or the appraisal.

Q: Last year I refinanced my home and the appraiser came inside to do an inspection. This year I got an equity loan and the appraiser never came inside to do the appraisal. How can the appraiser arrive at a value without coming inside?
A:A drive-by appraisal utilizes a similar process for estimating market value as the full appraisal with interior inspection. However, the drive-by appraiser must rely on outside sources for their information. For example, the appraiser may check court records or a multiple listing service record to obtain the age, size, and other characteristics of your home. Although these records may not always be accurate, they provide some basic information to complete the appraisal.