You’re in the process of refinancing your home. The lender has ordered an appraisal and you’re awaiting a phone call from the appraiser. Ring, ring, ring, goes your telephone. It’s Bruce, the appraiser! You and Bruce have a jolly conversation over the phone and schedule a convenient time for him to come perform a home. After getting off the call, you wonder to yourself…’’what’s included in a home inspection?’’ Well, we’re glad you wondered! Let’s get started.
An inspection is just one of the many tasks performed by an appraiser. Appraisers observe the components and characteristics of the subject property that’ll influence value in the market place. The appraiser’s home inspection takes into account a number of elements including:
- The physical characteristics of the dwelling and any outbuilding;
- Interior/exterior finishes and systems (i.e., heating and cooling);
- The quality of the improvements;
- And, any deficiencies or required repairs.
In addition to understanding the dynamics of the real estate market, AIC-designated appraisers also have construction knowledge, which is fundamental to their training. Members may also rely on the expertise of industry professionals where building characteristics are more complex.
During a typical site inspection, the appraiser will:
- Set a convenient time for an inspection.
- Plan for 20-40 minutes or more for an inspection depending on the size and characteristics of the property.
- Collect as much information as possible during the inspection of the home on the interior and exterior of the property (i.e., room layout, improvements, dwelling measurements, information on any outbuildings or garage, site improvements, etc.).
- Take photographs to provide a visual representation of the data described in the report. Exterior photographs are important to clearly identify the property and its characteristics. Interior photographs are often required by the appraiser’s client.
- Ask you about important features of your property such as the original date of construction, dates of any major additions or renovations, and extra features, to name a few.
- Gather information about recent market activity on your home. While public information is often available, the appraiser may inquire about any listings of the property (including private listings) or offers to purchase in the past twelve months, as well as any sales of the property for the previous three years.
Homeowners often ask for a verbal ‘’ballpark’’ estimate of value before the appraiser leaves the property. It’s important to note that most of the valuation process occurs after the inspection. Estimating the market value of any property requires the appraiser to complete a thorough analysis of the market conditions and factors that influence property values. Valuation is a complex process that involves collecting and analyzing anywhere between 3-10 (or more) comparable properties in order to form a reliable estimate of market value.