House Appraisals – Estimating the Value of a Home

Real estate appraisals are something which occurs in all segments of the market, from single family homes to commercial properties to condominiums. Appraisals are a useful tool for several aspects of real estate, and are important to the home owner in particular.

The purposes of house appraisals

  • Taxes. Every year, the value of your house is estimated by the county or the municipality (or both!) where you live. This appraisal is part of the formula for determining how much property tax you owe that year. These appraisals are usually casual, as the appraisers must look at all the houses in a given location. Thus, there is not a lot of time to scrutinize each house individually, inside and out. The appraised value of your home is usually based on the average selling price in your area as well as a quick look to see if any outside improvements (new roof, fence, carport, garage, pool) have been added which will increase its value.
  • Price determination. Much more detailed appraisals will occur when a transaction is being considered which will see the transfer of ownership of the house. There are three interested parties when it comes to appraisals. Buyers may ask for an appraisal in order to ensure that they do not pay too much for a property.
  • Sellers may ask for an appraisal in order to determine what they can expect to get from their house.
  • Lending companies may ask for an appraisal so that they do not lend too much money to a buyer who is going after an overpriced property.

In all three cases, the estimate offered by the appraiser will serve as the basis for price negotiations.

Who are appraisers?

Appraisers are ideally impartial third parties who provide a real estimate of a property’s worth. However, many transactions involve the services of several appraisers, one for each party that requests an appraisal. This indicates that there may indeed be some degree of partiality in a given appraiser’s estimate, depending on who hired them. Banks, for example, are notorious for having larger-than-life prices appraised on properties which have been foreclosed. Their appraisals are usually towards the higher end of a realistic price.

Appraisers are registered through the state in which they do business, after training work and a time in the field as practice.

What does an appraisal entail?

As noted above, an appraisal can take a few different forms, depending on the purpose. Quicker appraisals, such as those for tax purposes, are only about fifteen minutes long. Appraisals which involve walk-throughs may take longer; sometimes hours depending on the paper work involved.

As a general rule, the more thorough the appraisal, the more accurate the estimate. However, the appraised value is not set in stone. It is not a legally binding price, it is still a suggestion, however accurate it may be in reflecting market conditions. Appraisals of condos in particular may be misleading, as they are almost always done in comparison. The units in a complex are generally identical, thus appraisers will use sale prices to determine market value. If a person in the complex undersells, the result could be a downward adjustment of all the units in the complex.

If you are considering having your house appraised and know that it has considerably appreciated in value due to interior conditions (such as renovations and repairs) you may have doubts about your taxes going up. Although cities will use appraisers to determine tax value, appraisers retained by individuals are committed to confidentiality. Your home appraisal will not be subject to the scrutiny of city officials or other tax officers.

A house appraisal will come in handy for anyone involved in a real estate transaction. Just keep in mind that appraisal values will vary on several factors, including home improvements and the real estate market. The estimated value will probably also differ according to the individual service and who hired that service. Finally, remember that an appraiser’s price is not a guarantee of the reliability of the house or of a price. It is meant to be a figure upon which to negotiate, a ball park of the real cost of the house. The final price will be the one negotiated between the parties, and this will in turn affect the appraised value of neighboring houses!



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