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Basics to Understanding a Home Appraisal Report
Monday, July 13, 2015

Though the duties between a real estate agent and an appraiser do differ, the two professions will often be working in the same line of business: with properties. Real estate agents aren’t just limited to residential properties, and neither are appraisers or assessors (case in point, the Lexur Appraisal Services team). However, in one portion of the buying-and-selling process, real estate agents aren’t the experts to contact when you have a question about the appraisal report. The overall appraisal report can be confusing, especially when you aren’t knowledgeable in every aspect of the assessment industry. However, breaking it down can be simple, and it can help you further understand how the assessor determined the property value in the report.

In a typical appraisal report, the assessment should be broken down into multiple separate sections showing how the appraiser came to determine the value of a particular property. For homes, the appraisal report is typically sectioned with three common features, and maybe more: property facts, comparable properties, and the estimated market value of the property. As basic and straightforward as that information sounds to be, the appraisal report is customarily requested on behalf of the lender. Thus, the appraisal report is written for the lender, primarily in order for this lender to determine a fair property value and see how much money they should lend to you, the seller of the property.

However, once the appraisal report is delivered to you (and to the lender), knowing how the report is written and understanding the information it consists of, are two completely different concepts. In order to understand how an assessor determined the estimated market value of your property — specifically in this case, a house — it needs to be broken down further.

·    Home or Property Facts

       o   This section will list specific identifying characteristics of your property or home, and any improvements that have been made to it.
       o   Another portion of information this section will contain is the neighborhood, community, metropolitan area, etc. that the home is located in. Why is this needed? It helps identify similar properties or houses that yours can be compared to, which brings us to the next section. …

·    Comparable Properties or Homes
o   Comparable homes are usually those within the same neighborhood, community, metropolitan area, etc. that have been sold within the last six months.
o   The assessor who completes your appraisal report will list each of these comparable homes with their estimated market value (most likely determined by another assessor) and how much each home actually sold for.
o   However, in order to give the best-estimated market value for your house, some adjustments to these comparable homes may be made. This may or may not affect the worth of your property on the appraisal report, but it can sometimes be complicated to find comparable homes, as each and every property is distinctive.
o   An important thing to remember about this section is that it is the one the lender typically bases their decision upon of how much money they will lend you during the buying-and-selling process.

·    Estimated Market Value

      o   In the appraisal report, this section lists how much the assessor feels your property or home is worth.
      o   This property value is the value lenders will use to determine how much money they will lend to you.
      o   In the section for the estimated market value, the estimate listed also is used for the loan-to-value ratio.

Depending on what type of property you’re having undergo the appraisal process, the appraisal report can include numerous other facets, and can be even more detailed than the one an assessor conducts for a home appraisal. For more detailed appraisal reports, these reports can go as far as providing more information on comparable properties, or inform the lender how much it would cost to replace the entire property, otherwise known as cost value.

Contact Lexur Appraisal Services today if any of the many services we offer can be beneficial to your property.

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