How to Read a Home Appraisal Report

When buying or selling a home, one of the most important documents you will need to know how to read is the appraisal report. This document tells you everything you need to know about the property’s value in question.

First, obtain a copy of the appraisal report if you don’t have it already.

While selling your home, you do not automatically get a copy of the report. If you don’t have one, you can request it, and the lender should provide you with it within 30 days.

Assuming the valuation came in under the agreement value, your realtor will work with you on adjusting your home price. If you get a valuation outside of the home deal process, the appraiser should send you a duplicate of the report.

Page 1: Check that your address looks correct.

The appraisal report should have your full address, including the unit or apartment number if you live in a condo or multi-family home.

Concentrate on page one at the highest point of the report under the “Subject” segment. Affirm that the “Property Address” is exact, including the ZIP code and County. If it’s wrong, you should speak to your appraiser to correct the mistake.

Page 1: Property description

The appraiser will describe the property in this section. This includes the address, lot size, square footage, number of bedrooms and bathrooms, type of construction, and any special features or amenities included with the property.

The following key points are important to look for in this section:

  • Address – The appraiser will list the property’s address in this column.
  • Lot Size – The appraiser will list the size of the lot in square feet or acres in this column.
  • Square Footage – The appraiser will list the total square footage of the property in this column.
  • Number of Bedrooms – The appraiser will list the number of bedrooms in the property in this column.
  • Number of Bathrooms – The appraiser will list the number of bathrooms in the property in this column.
  • Type of Construction – The appraiser will describe the type of construction used to build the property in this column.
  • Special Features or Amenities – The appraiser will list any special features or amenities included with the property in this column.

If all the information on this page has been filled in correctly, the appraiser knows your property well. Often, this section includes images and other descriptions.

Page 1: Neighborhood Scorecard

Page one will also have all the information about the property’s neighborhood. The following key points are important to look for in this section:

  • Crime Score – The appraiser will list the crime score for the neighborhood in this column.
  • Schools – The appraiser will list the schools in the neighborhood in this column.
  • Neighborhood Amenities – The appraiser will list the amenities in the neighborhood in this column.

If you find some wrong information in the middle of an appraisal report, you can appeal. Talk to your appraiser about any unclear numerical errors to avoid the challenging process of appealing. In case you decide to appeal, do the following:

  • Contact the lender
  • Address the problems impartially
  • Start a second appraisal
  • File a complaint (if applicable)

Pages 2 and 3: Why is your home worth that much?

The appraiser will list why your home is worth the appraised value on pages two and three of the report. This section is important because it will give you an idea of what buyers are looking for in a home like yours and what they think is important. It will also give you an idea of what improvements you could make to your home that would increase its value. Take a look at this section and see if there are any areas where you could make improvements.

Additionally, an appraiser can use three methods to calculate the value of your property

Comparable Sale Methods

The appraiser will find similar homes in your area that have recently sold and use those sale prices to determine the value of your home. This is the most common method used by appraisers.

You should pay attention to the following key points in this section:

Date of Sale

The appraiser will list the date of each sale in this column. It would be best to make sure that the sales used to value your home are recent, within the last six months to a year. If there are no recent sales, or if there are only a few, the appraised value of your home may be lower than it would be otherwise.

Location

The appraiser will list the location of each sale in this column. The closer the location is to your home, the more weight it will carry in determining the value of your home. Supposing your property is on a private lane and the comp had indicated it should be next to a highway, this becomes a major disadvantage for you. Your property should be at a close proximity with the listed comp.

Size

The appraiser will list the size of each sale in this column, usually in square footage. The closer the size is to your home, the more weight it will carry in determining the value of your home.

Price

The appraiser will list the price of each sale in this column. This is the most important column because it’s the one that will be used to determine the value of your home.

Comparability

The house should be like yours to be utilized as an examination apparatus. Yet, just homes that have previously sold can qualify as a comp. Ensure each of the three properties recorded has sold and isn’t simply available. In any case, this is an off-base impression of cost.

The appraiser will look at all of these factors and develop a comparable sales price for your home.

Cost Approach (Page 3)

The appraiser will also estimate the cost of rebuilding your home from scratch and subtract any depreciation to create a value for your home. This approach is most commonly used for newer homes or homes that have been significantly renovated. This technique is utilized on top-of-the-line properties when comps actually won’t cut it or a remarkable property where comps don’t exist. It’s likewise utilized when your house is under or over-improved for the area. Assuming you own an amazing house or a house that needs a ton of improvement. two methods are used to determine the cost approach method.

Reproduction in Cost

The appraiser will estimate the cost of rebuilding your home from scratch. This includes materials, labor, and any other costs associated with building a home. The appraiser will then subtract any depreciation to develop a value for your home.

Replacement Cost

The appraiser will estimate the cost of replacing your home with a new one similar in size and quality. This includes materials, labor, and any other costs associated with building a new home.

The appraiser will then subtract any depreciation to develop a value for your home.

Income Approach (Page 3)

The appraiser will also use the income approach to determine the value of your home. This approach is most commonly used for income-producing properties, such as rental properties. 

The appraiser will estimate the potential income that your property could generate and then subtract any expenses associated with owning and operating the property.

The appraiser will then discount the estimated future income to present value to create value for your home.

The following key points are important to look for in this section:

  • Gross Rent
    • The appraiser will list the estimated gross rent that your property could generate in this column.
  • Operating Expenses
    • The appraiser will list the estimated expenses associated with owning and operating your property.
  • The appraiser will also estimate the potential income that your property could generate and then subtract any expenses associated with owning and operating the property.
  • The appraiser will then discount the estimated future income to present value to create value for your home.

Pages 2 and 6: See what your home appraised for.

The value of your home is on page two in the “Valuation” section near the top of the page, and it’s repeated on page six in the “Highest and Best Use” section.

This is likely the number you agreed upon with the buyer if you’re selling your home. If you’re buying a home, this is likely the number your lender will use to determine how much money to lend you.

It’s important to remember that the appraised value is not necessarily the same as the market value of your home.

The appraised value is what the bank thinks your home is worth, while the market value is what buyers are willing to pay for your home.

Depending on current market conditions, your home could be worth more or less than the appraised value.

Page 6: Your appraiser’s onsite visit.

This page best describes the legwork the appraiser did on your property. Under the subject property, the appraisal report will indicate the steps the appraiser took to examine your house and whether they visited and did an inspection of both the interior and exterior.

Additionally, under this section, the appraisal report should indicate whether the appraiser looked at the exteriors of your property. If they did not get a chance to, this indicates a lack of familiarity with your property.

Contact ExcelAppraise To Learn More On How To Read An Appraisal

ExcelAppraise offers the best home buying and home selling appraisals. If you want to know how to read a home appraisal report our experts will save you time. We offer free quotes on all of our appraisal services. Call us at 1-801-882-2292 or request a free quote today.

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