Whether you are buying, selling, or refinancing your home, or obtaining an appraisal for estate planning, liquidation, or divorce settlement, an appraisal helps to determine the market value of the property.

An appraisal is a report that is prepared by a trained professional in the real estate field who is knowledgeable about what gives a home its worth. The appraiser evaluates your home's interior and exterior, makes notes of upgrades and deficiencies, and determines an unbiased estimate of market value.

There are three approaches to value commonly used by appraisers; however, most consideration is typically given to the sales comparison approach which compares the subject’s property characteristics with those of comparable properties which have recently sold in similar transactions. The sales comparison approach is based upon the principles of supply and demand, as well as upon the principle of substitution. Supply and demand indicate value through the typical market behavior of both buyers and sellers. Substitution indicates that a purchaser would not purchase an improved property for any value higher than it could be replaced for on a site with equivalent utility.

Five factors are considered when determining comparables:

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• Conditions of Sale—Did the comparable recently transact under conditions (e.g. -- arm’s length, distress sale, estate settlement) which are consistent with the standard of value under which the appraisal is being performed?

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• Financing Conditions—Was the comparable transaction influenced by non-market or other favorable (or even unfavorable) financing terms? For example, if the comparable is sold with a below-market interest rate provided by the seller, and if the standard of value (e.g. – market value) assumes no such abnormal financing, then the appraiser may need to adjust the comparable price by an amount equal to the estimated impact of the favorable financing.

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• Market Conditions—This is often referred to as the time adjustment and accounts for changing prices over time.

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• Locational Comparability—Are the comparable and the subject property influenced by the same locational characteristics? For example, even two houses in the same neighborhood may have different views which cause one to be more valuable than the other.

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• Physical Comparability—This includes such factors as size, condition, quality, and age

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• We are often asked what the homeowner can do to prepare for the appraisal inspection. While you may be inclined to clean the home from top to bottom, the appraiser is not there to rate the cleanliness of your home. You may wish to clear any clutter that may prohibit the appraiser from entering the rooms, but scrubbing floors and bathrooms does not affect the appraised value of the home. Prior to the appraisal inspection, it is highly recommended to prepare a detailed list for the appraiser of all the recent improvements completed.
  
  If you have any additional questions about the appraisal process, we would love to hear from you. Please contact us at office@epicappraisal.com, or to order an appraisal, CLICK HERE.