Residential real estate appraisal reports can be very complex documents filled with extensive market data and documented procedures for estimating value. For the novice, as well as the seasoned real estate professional, the reports can be difficult to understand, and most users simply look for the statement of value.
The residential real estate appraisal report is merely a tool used by various parties to assist in a real estate transaction. Valuations of residential real estate are conducted using similar methods, regardless of the type of property or who employs the appraiser. Appraisers work in areas they are familiar with so they should have a working knowledge of any environmental or other concerns that may affect the value of a property.
Residential real estate appraisal reports will note any unique characteristics of the property and of the surrounding area, such as a specific architectural style of a property or a major
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o The valuation method used in the report.
o A detailed description of the property.
o A statement that the appraiser has no financial interest in the subject property.
o The appraiser's qualifications and signature.
Each part of the report plays a role in assisting the user's understanding of the final valuation of residential real estate. Appraisal is an art, not a science. But there is one section of the appraisal report that draws significant attention. It is the section that describes the most likely approach utilized to determine an estimated value - the market comparison approach.
This approach is based on recent sales prices of comparable properties. Information is collected on recent sales of properties similar to the subject property. The appraiser will search for similar properties; however, comparable properties will not be identical to the subject property, so there will be a valuation