Insights Basics
What an appraisal is, and what it is not
An appraisal is not an assessment or a broker's opinion. Here is what you actually get, and why the effective date matters.
People use the word "appraisal" loosely. A lender, a county assessor, a real estate agent and an online estimate can all put a number on the same house, and the numbers rarely match. Only one of them is an appraisal.
What an appraisal is
An appraisal is a written opinion of market value, prepared by a licensed appraiser as of a specific date. It is an independent, objective analysis of comparable sales, land sales, listings, leases, construction costs and other market data. The appraiser has no stake in the outcome. The job is to find the value the market supports, and to show the work so that a lender, a court, a tax board or the other side of a negotiation can follow it.
A good report explains which properties were compared and why, what adjustments were made for differences, and which approach to value carried the most weight. If you cannot follow the reasoning, the number is hard to defend.
What an appraisal is not
- It is not a tax assessment. The county assessor values every property in the county for tax purposes, usually with mass appraisal models. An assessment is a starting point for your tax bill, not an analysis of your particular property.
- It is not a broker's opinion. A broker price opinion or comparative market analysis helps set a listing price. It can be useful, but it is prepared by someone who is often also marketing the property.
- It is not an online estimate. Automated values are built from public records. They do not see the condition of the building, the finished basement, the leaky roof or the lease that runs another five years.
Why the effective date matters
Every appraisal states an effective date: the date the value applies to. Values change with the market, so the date is part of the answer. For a purchase or a refinance, the effective date is usually close to the inspection. For an estate, the value is often needed as of the date of death, which can be months or years in the past. For a divorce or a lawsuit, the date may be set by the court or by agreement between the parties.
Getting the date right is as important as getting the value right. A careful value as of the wrong date does not answer the question being asked.
What to have ready
When you request an appraisal, it helps to know the property address and type, why you need the value (the intended use), who will rely on the report, and any date the value must reflect. With that, we can quote the fee and a delivery date before any work starts.