An appraisal is an integral part of the home buying process as it determines the objective value of a property. Lenders require an appraisal to help them evaluate a home before they issue a mortgage. Appraisals are done by trained and licensed appraisers, who will then give an unbiased report of the home's market value.
We’ve already uncovered some of the most common misconceptions about the home appraisal that most buyers and sellers have, and it’s a first step to understanding this valuable process. Now, the next important question is: “What do appraisers really look at during a real estate appraisal?”
Most appraisers use the Uniform Residential Appraisal Report by Fannie Mae, which includes a set of standards that determine the scope of an appraiser's inspection. They look at a number of factors to get an accurate appraisal, including:
The home's exterior
The appraiser will pay serious attention to the structural aspects of a home, specifically its foundation, the walls, and roof. The checks will determine the integrity and functionality of those three major components, as well as any defects or damage in the general construction. Any problem with the roof or foundation can immediately dismiss the home unlivable. The inspection will also assess the age of the home, any issues with siding or guttering, and evidence of leaks, cracks or water damage. Be aware that the appraiser will greatly focus on these things as they could definitely impact a home’s value.
Other external factors that will be checked include any potential issues like flood-prone areas and dead trees, parking facilities, and the home’s observable external condition.
Size of the property
When the home is being evaluated, the size of the lot and the size of the home itself are all important considerations. An appraiser will be concerned with the total square footage and the home's functional layout, as well as the number of bedrooms and bathrooms. The more bedrooms and bathrooms there are in a home, the higher its expected value because most buyers would want the most number of rooms.
The condition of the home's interior
For an appraiser, the condition of the home’s interior is just as important as its exterior. Appraisers will check the materials and condition of the windows and doors, flooring, plumbing and electrical systems, the number and quality of appliances, the kitchen, bathroom, and all other important parts of the home. He or she will also check for health and safety issues, such as fire escapes and handrails. If the home has undergone a major remodel, it is his/her job to check the code compliance requirements for certain renovation projects. Appraisers will also look closely and itemize all appliances and fixtures installed in the home, including the dishwasher, refrigerator, washer/dryer, oven, and others.
Quality home improvements
The appraiser will also be very interested in any improvements you made to your home, as well as the quality of those improvements. Quality upgrades that make your home more desirable will be considered by the appraiser to determine your home's overall value.
A new floor, a renovated kitchen or bathroom, new HVAC system, upgraded appliances, insulated windows, renovations to the attic, a garage, and any smart technology systems installed, can all add to the lasting value of the property. These upgrades are all critical elements and will be itemized during the home appraisal. Appraisers will also check for amenities like a fireplace, patio, fence, porch, and other home additions.
Using Comparable Sales or “Comps”
The home's location and neighborhood also have an impact on its value since appraisers also use “comparable sales” when finding the value of a home. Comparable sales refer to the prices of homes in the neighborhood that have similar age, size, and construction to the home being appraised and which have been currently sold. Appraisers will chiefly consider the square footage and the number of rooms of the home and compare it to other properties. The comparison should be apples to apples, meaning, residential homes will be compared to other homes and condos are compared to other condos. Appraisers can then make adjustments with these “comps” based on the features and qualities of the subject property. A home can be priced higher if it has more bedrooms, or its value can be lowered if there’s a problem with the roof or its foundation.
Bottom Line
Remember that an appraisal is not an exact science but only an opinion of a home's value based on the comps and the actual condition of the home. In other words, appraisers are looking for any items that can affect the home’s value. The final valuation will be based on real estate market trends, current sale prices, and the specific characteristics of the home. The final appraisal report includes the information used by the appraiser, details about the subject property, and the explanations of the valuation results. The report will be given back to the lender, who will then use it as a guide before making a decision about the loan.

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Counseling Session Activities
- Prepare the buyer for executing a buyer representation agreement
- Explain agency relationships to the buyer and get state required legal consent to represent, if needed
- Inform the buyer of working relationship based on state law, the REALTORS® Code of Ethics, and the broker’s business policies
Building a Relationship
- Learn the buyer’s wants and non-negotiable needs
- Understand the buyer’s budget and what will be needed financially
- Help the buyer understand what property their chosen budget will buy
- Consider having the buyer fill out a homebuyer’s checklist
- Assist the buyer in examining how much they can afford to spend
- Provide quality lender resources
- Partner with the buyer to locate suitable properties for consideration
- Match the buyer’s needs with available property
- Constantly re-evaluate buyer’s needs and refocus property showings to fit those needs
- After ensuring the buyer understands what is done for them, how it is done,and the benefit to them, obtain signatures on the buyer representation agreement
- Explain how compensation is paid, who pays it, and what the buyer’s options are for paying it
Educating the Buyer
- Communicate the working relationship based on state law, the REALTORS® Code of Ethics, and the broker’s business policies
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- In accordance with state law, provide information on checking the sex-offender registry and crime statistics for the neighborhood
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Preparing the Buyer
- Explain the timeline for house hunting, mortgage approval, and closing
- Explain the local market and how it impacts the buyer
- Show statistics on what percentage of list price sellers in the area are currentlyreceiving
- Inform the buyer on what home features are popular
- Identify current average days on market
- Share the dangers of using the price per square foot to figure home values
- Explain the concept of absorption rate and how it impacts the buying process
- Indicate current listing months of market inventory
- Share estimated potential out-of-pocket costs to complete the transaction
- Assist the buyer in analyzing the loan estimates
- Qualify the buyer for financial ability to purchase
- Help the buyer account for the complete costs of homeownership
- Prepare lender for listing agent calls
- Assist in comparing different financing options
- Help the buyer select for viewing only those homes that fit their needs
- Proceed in showing homes that fit the buyer’s must-haves
- Caution the buyer on posting information to social media
- Review the sample sales contract so the buyer is prepared when it comes time to make an offer
Showing Properties
- Schedule showings and provide access to all listed properties as soon as they become available in their local MLS broker marketplaces
- Educate the buyer on the immediacy of new listings appearing in their local MLS broker marketplaces and the lag time for them to appear on some websites
- Collaborate with the buyer on properties they may have learned about through their sphere contacts
- Research and assist on all unlisted properties the buyer wishes to see
- Preview properties prior to showing if needed
- Network with other agents to source properties not yet in their local MLS broker marketplaces
- Contact homeowners in focus areas to see if they are considering selling
- Set up an automated email alert system through their local MLS broker marketplaces that immediately notifies the buyer of properties that fit discussed requirements
- Arrange a tour of areas, schools, and key points of interest
- Provide resources containing neighborhood information on municipal services,schools, etc.
- Inform the buyer of negative aspects like nearby venues or operations that may result in issues that could impact value
- Collect and share any other vital information on available homes, remembering to follow all fair housing laws at all times
- Check applicable zoning and building restrictions
- Help the buyer decipher public property and tax information
- Collect and share pertinent data on values, taxes, utility costs, etc.
- Compare each property shown to the buyer’s wants and needs list and remind them of what they were looking for
- Help the buyer narrow the search until the buyer identifies top choices
Negotiating Offers
- Assist the buyer in getting the best property at the best price
- Suggest that the buyer learn more about the neighborhood prior to makingan offer
- Prepare a comparative market analysis (CMA) in advance of making an offer
- Prepare the buyer to have the most attractive offer in the current marketplace
- Explain common contract contingencies and include approved protective clauses in the purchase offer
- Ensure that the buyer receives and understands all state and federally-required disclosure forms
- Prioritize contract negotiation goals with the buyer
- Help create a negotiating strategy
- Use strategies such as an escalation clause to maintain a competitive offer
- Prepare the buyer for a multiple offer situation and develop negotiation strategies
- Write an offer that has a reasonable chance of being accepted
- Recommend optional contingencies and explain the pros and cons of using them
- Provide information on purchasing incentives that may be available
- Discuss financing alternatives
- Negotiate the buyer’s offers to arrive at the best price and terms
- Utilize hyperlocal expertise and strong communication skills to assist the buyer in being the successful offer

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