Real estate has a lot of moving parts, and one of the most important is the appraisal. Here's the subject broken into plain-language questions and answers.
What is real estate appraising, and why is it needed?
Appraising is the process of evaluating a property — the land, the dwelling, and its features — to establish an estimate of market value. It's needed because every property is different: location, size, and the quality and age of construction all affect what it's actually worth.
Who conducts a residential real estate appraisal?
A licensed real estate appraiser, residential or commercial, examines and evaluates the property. Their work is governed by standards set by the Appraisal Foundation, published in the Uniform Standards of Professional Appraisal Practice. The appraiser assesses the property, prepares a written report, and evaluates its market value.
When should you hire one?
Beyond the obvious moment — buying or selling — there are several other times it's worth bringing in a professional appraiser:
- Buying insurance for the property
- Settling an insurance claim on the property
- Applying for financing that uses the property as collateral
- Settling an estate and dividing it between heirs
- Establishing market value for dividing assets in a divorce
- If the market value has risen enough that your equity has grown, and you'd like to reduce or drop a lender's mortgage insurance requirement
- If the market value has dropped since the last appraisal, and you'd like a reduction in property tax
How do I choose a good one?
A few things worth checking before you hire:
- They should be licensed, with real knowledge of your area and experience with complex or atypical properties — like, say, one with 104 steps to the water
- They should have access to good data sources — some appraisers cut corners here to save cost, and it shows up in the report
- Check their professionalism through competitive rates and a reasonable turnaround time
How much should I pay?
Rates vary with the size of the property, the complexity of the report, and turnaround time. A standard residential appraisal typically runs $250–$350; larger residential complexes can run $500–$1,000. Turnaround for a standard residence is usually about two days, though industrial properties or large buildings can take one to four weeks.
A good appraiser is honest, and gives you a quality report with the best possible read on your property's market value. Ours certainly does. We asked him ourselves.