How to Read an Appraisal Report

When you get your appraisal report it may sometimes be twenty to thirty pages in length. This may be overwhelming to digest. This article will let you know what are some important elements of your report.

Most appraisal reports will consist of the same main parts: basic property information, comparable sales information, and value conclusion.

Here is a guide where how these three items are often laid out in the appraisal report: 

A Description of the property (land and the improvements on the land)

The beginning of the report will typically contain the property’s basic information. The address, property tax, the type of property, the size of the land, any updated or renovations done, and other general information. It is important that the information in this part is all correct to ensure that the appraiser can find and compare it to similar homes to come up with an accurate value. 

        Pro Tip – If you are the homeowner ordering the appraiser to help you determine the market value in order to sell the property, then this information is already known. Therefore, this section may not need to be as extensive.


The next prominent section of the appraisal is where you can find the homes that the appraiser used to compare to your property, and their corresponding sales prices. Here you may also notice adjustments in the comparables values. These are made in order to estimate the market value of your home. The appraiser should be able to show the bases for these adjustments.


At the bottom of the page featuring comparable sales is one of the most important parts of the appraisal for you, the client, your home’s value. To better understand HOW the appraiser arrived at this number, look for the reconciliation or the summary conclusion section. 

This is by no means an exhaustive list of what is included in an appraisal report.  However, now that you have an idea of three important sections (property description, comparables analysis and value conclusion/reconciliation, keep in mind that you should carefully read it and check if there are any errors, missing information, and whether or not you feel that the final value is correctly justified.  A good appraiser will not be concerned if you call to ask a question or two about his conclusions.

Download the eBook to see where you can find these important sections in the appraisal report.

5 Questions to Help You Choose the Right Appraiser

You know you need an appraiser to value your home, but when you look online, there are so many to choose from! Sure price may be a factor, but simply going for the cheapest appraiser may likely lead to disaster! But what else do you ask the appraiser when you give him or her a call????

This blog post will guide you through that process….

It is important to choose the right appraiser to value your property because it will save you a lot of time, money, and energy. In order to determine the best appraiser for you home, here are some categories of questions you can ask before you hire:

‘Basic information’ Questions

You should get to know the appraiser you are going to work with. You may ask if they work alone or with a company, if they work full time as an appraiser, how many appraisals they usually do in a day, or a week. Also get their contact information and when is a good time, you can reach them. This can make communication easier especially when you might need to ask questions or provide information about anything concerning the appraisal.

Licensure Questions

Ask if they are licensed or certified, and if they have other professional designations or are continuing any education – This would let you know if the appraiser is qualified to do the job and also what types of properties they are permitted to appraise. Certified appraisers will have completed more basic education and will generally have a greater depth of experience compared to licensed appraisers.

Experience Questions

How long have they been appraising property? Are there specific types of properties they appraise? – The appraiser’s experience and knowledge in the field are very important things to consider. It is recommended that the appraiser you hire has at least 5 years of experience for simple properties and at least 10 years for more complex ones. You would also want to know their experience in appraising homes similar to yours, especially if your home has some special features.

Time-frame Questions

Ask when the report will be ready – This will ensure when you can expect the report to be ready. It is important to establish a date to avoid delays to the whole process of buying or selling a home.

And perhaps the all time favorite…

Money Questions

Ask what is their fee and the basis of what they charge – it is advised that you do not hire an appraiser that charges a percentage of the appraised value. This indicates a bias in the home’s value. Appraisal fees vary depending on your location so researching the usual cost for your area and type of home will help give you an idea of the range.

It goes without saying that you need to be able to know and trust the professional who will have access to your home and accurately determine its value. Being ready with questions of the main things you need to know about the appraiser will ultimately help you to select the right person for the Job.


Should I finish a home improvement project before the appraisal?

You just took a sledge hammer to the wall of your tiny kitchen which has been confining you for years!!! AHH! The feeling of liberation! Your kitchen expansion project is underway! Wait a second…you need some cash to finish the project, so you decide to refinance. But does the project need to be complete before the bank will lend the money?

Unfortunately, I can’t answer for the bank. However, I can let you know some appraisal terms that come into play. “as-is” value and “subject to” value.

What do “as-is” and “subject-to” values mean?

• “As-is” value – An estimate of the market value of a home in its current condition, use, and zoning.

• “Subject to” value – This is what the value will be whenever certain conditions are met. It is determined by taking into consideration the proposed improvements.

If the as-is value (broken wall and all!) is acceptable to the bank, they may lend! However, there is one caveat…The appraisal report must identify and describe physical deficiencies that could affect a property’s safety, soundness, or structural integrity. If the appraiser has identified any of these deficiencies, the property must be appraised “subject to” completion of the specific repairs or alterations.

Two major take aways: 1) how much has your home value dipped considering your property in its current stage of renovation and 2) does the current stage of renovation represent a health and safety risk!

What is Market Value?

In the context of selling your home or buying a home, what exactly is market value? This sounds like a really simple question. Someone might respond, “market value is the price that someone is willing to pay for a home”. However, there are other factors that must be taken into consideration.

Here is a definition from the Fannie Mae Selling Guide (This definition is also stated in most appraisal reports related to mortgages)


Market value is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

  1.  buyer and seller are typically motivated; both parties are well informed or well advised;
  2.  each acting in what he or she considers his/her own best interest;
  3.  a reasonable time is allowed for exposure in the open market;
  4.  payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable   thereto;
  5.  the price represents the normal consideration for the property sold unaffected by special or creative   financing or sales concessions granted by anyone associated with the sale.

One main take away is that for it to be said that a home was sold at “market value” five conditions have to be met.

Real world application of this point
If a home’s prior sale price was not market value then an appraiser should not use that prior sale as a comparable.

How to Value Your Home in a Bankruptcy?

A financial crisis could happen to anyone at any time. If you have to file for bankruptcy, and you are a homeowner, how does your home come into play?

A bankruptcy filing includes forms called schedules. Your schedules must list the value of each item of property you own. The legal standard for home valuation in bankruptcy is fair market value.

At this point, you might be thinking, “Can I simply put my best guess of my home’s fair market value?” The answer is, “Yes” you can. Unfortunately, your best guess may turn into a big mess if it totally misses the mark . In addition, it may not be able to stand up under scrutiny.

Three Ways to Determine Fair Market Value – and their associated cost


Formal appraisal – $$$
This involves hiring a real estate professional to come to your home, inspect it, and run an analysis of the market in your area. The appraiser will then provide a report that indicates a professional opinion fair market value for your house.



Formal market analysis – $$
This is a second, but less accurate option. A real estate professional will look at market conditions in your area and analyze recent home sales and current home listings in your area to determine what your house would likely sell for. If homes were apples, the formal market analysis method would be like finding out which isle in the grocery your apples are located in, and what the average price of apples are. The formal appraisal method would be like a report telling you the price of your specific apple (i.e. red delicious) and perhaps how that price compares to other apples.



Local listings comparison – $
This is a third method of determining fair market value. Let’s call it the do-it-yourself method. You review real estate listings in your neighborhood and estimate a value for your own home (taking into account the condition of your home) based on what other houses in your area are selling for.



Selecting the valuation method for your situation will depend on your purpose. The more important your home value is to your situation, the more thorough and formal a method you should choose.

Two Numbers You Should Know Before Buying a Home

When I prepare appraisal reports for buyers who are wondering if their potential home purchase is worth the ticket price, I often include homes that are currently listed for sale.

Why include listings and what other number must you consider?

Why include listings? – This gives the client an idea of the price that other people are charging for homes similar to the one they are thinking of buying.


Besides price what other number should be considered? – Besides the price tag, another very important piece of information is the DOM – Days on Market.

This lets you know how long a home has been sitting on the market. The higher the DOM, the longer it has been sitting.

This suggests a problem selling the home, perhaps it is over-priced.


Bottom line: prices of homes that have sold, that are comparable to the one you are thinking of buying, are key indicators of value. However, two other category of numbers that must be considered are 1) list prices of homes on the market as well as 2) their respective DOMs, as these can let you know when a home may be overpriced.