Appraisals Q & A
Q: How is a home’s value determined?
A: You have several ways to determine the value of a home.
An appraisal is a professional estimate of a property’s market value, based on recent sales of comparable properties, location, square footage and construction quality. This service varies in cost depending on the price of the home. On average, an appraisal costs about $300 for a $250,000 house.
A comparative market analysis is an informal estimate of market value performed by a real estate agent based on similar sales and property attributes. Most agents offer free analyses in the hopes of winning your business.
You also can get a comparable sales report for a fee from private companies that specialize in real estate data. You also can find comparable sales information available on various real estate Internet sites.
Q: What is the difference between market value and appraised value?
A: Appraised value is a certified appraiser’s opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees range from $200 and up.
Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker.
Q: What’s a house worth?
A: A home is worth what someone will pay for it. Everything else is an estimate of value. To determine a property’s value, most people turn to either an appraisal or a comparative market analysis.
An appraisal is a certified appraiser’s estimate of the value of the property at a given point in time. To make their determination, appraisers consider square footage, construction quality, design, floor plan, neighborhood, availability of transportation, shopping and schools amenities, energy efficiency. Appraisers also take lot size, topography, view and landscaping into account.
A comparative market analysis is an informal estimate of market value, based on comparable sales in the neighborhood, performed by a real estate agent or broker. You can do your own cost comparison by looking up recent sales of comparable properties in public records. These records are available at local recorder’s or assessor’s offices, through private companies or on the Internet.
Q: What standards do appraisers use to estimate value?
A: Appraisers use several factors when estimating value including historical records, property performance, condition of the home and indices that forecast future value. For detailed information on appraisal standards, contact the Appraisal Institute at 875 N. Michigan Ave., Suite 2400, Chicago, IL 60611-1980; (312) 335-4458.