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Discover the key factors that influence a real estate appraisal in the United States. Learn what appraisers consider when determining the value of a property for buyers and sellers.


When it comes to buying or selling a property, understanding the factors that determine its value is crucial. A real estate appraisal plays a significant role in determining the fair market value of a property. But what exactly is a real estate appraisal based on? In this comprehensive guide, we will explore the key elements that appraisers take into account when evaluating properties in the United States.

What is a Real Estate Appraisal Based on?

A real estate appraisal is an unbiased assessment conducted by a licensed appraiser to determine the market value of a property. It involves a thorough examination of the property, its surroundings, and various market factors. Appraisers utilize their expertise and knowledge to provide an accurate estimate of a property's worth. Here's what they consider:

  1. Property Characteristics:

Appraisers evaluate the physical attributes of a property, including its size, layout, condition, and age. They assess the number of bedrooms and bathrooms, square footage, and any unique features that

A qualified appraiser creates a report based on an in-person inspection, research into recent sales of similar properties, current market trends, and the details of the home, including its size, condition, floor plan, and amenities. The borrower usually pays the appraisal fee, which averages $300 to $450.

What negatively affects home appraisal?

Some homes, particularly older homes, were built with dated materials that are now seen as hazardous. This includes things like asbestos tile and insulation and lead paint. Even if the materials are safe, if they haven't been updated, your home may not be as energy-efficient, which could also affect value.

Does cleanliness affect a home appraisal?

What kinds of mess can affect a home's appraisal? Appraisers are trained to overlook clutter. Stray clothes, scattered toys, unwashed dishes, unmade beds, disorganized closets, and other items that suggest you actually live in your house should not affect an appraisal if they don't affect its structural integrity.

What not to say to an appraiser?

In his post, he lists 10 things as a Realtor (or even homeowner), you should avoid saying to the appraiser:
  • I'll be happy as long as it appraises for at least the sales price.
  • Do your best to get the value as high as possible.
  • The market has been “on fire”.
  • Is it going to come in at “value”?

What if appraisal is lower than offer?

This can be a problem because lenders will only lend on the appraised value. If your appraised value is lower than the agreed upon sales price, you'll have to make up the difference in cash, or cancel the deal.

Under which approach to value is personal property included in an appraisal?

The valuation of personal property and fixtures for assessment purposes most often involves the use of a mass appraisal method. The Cost Approach to value is the method of valuation used most often to value assessable personal property and fixtures.

What are the three methods used by appraisers to value a property?

The approaches to value are: Sales Comparison (or Market Data) Approach; Cost Approach; and Income Approach.

Frequently Asked Questions

How do you calculate personal property value?

To get an item's actual cash value or ACV, multiply the replacement cash value or RCV, the cost of purchasing the item now, by the depreciation rate, or DPR, expressed as a percentage, and the item's age. Subtract that value from the RCV value. ACV = RCV (RCVDPRAGE).

What states has the most reciprocity for real estate license?

The full license reciprocity states are: Alabama, Kansas, Virginia, Colorado, Mississippi, Alaska, Washington, Missouri, Georgia, Delaware, Kentucky, and Maine. Any state with full reciprocity allows you to bypass the general real estate courses and narrow your focus to the state-specific laws and requirements.

Does Rhode Island have reciprocity with Massachusetts real estate license?

Rhode Island and Massachusetts have real estate license reciprocity. Massachusetts offers Pre-Licensing Courses online, so this means that you can get your Massachusetts real estate license online and be automatically entitled to a real estate license in Rhode Island through reciprocity.

When estimated by an appraiser what is market value?

A home's market value is what buyers are willing to pay for a home — not what the seller lists the home for. To determine market value, comparable listings (comps) are one of the most important factors. Market value is much more volatile than an appraisal and is adjusted for things like market conditions.

What type of value do real estate appraisers generally attempt to estimate is value?

Real estate appraisers and valuation professionals generally calculate property valuations using the three different methods of value: the cost approach; the income approach; and the comparable sales/ market approach.

What happens if house appraises for more than purchase price?

If A House Is Appraised Higher Than The Purchase Price You're in a good situation if this happens. It simply means that you've agreed to pay the seller less than the home's market value. Your mortgage amount does not change because the selling price will not increase to meet the appraisal value.

What is the difference between fair market value and estimated market value?

FMV is a hypothetical value—it is determined based on the estimated amount a buyer and seller would likely agree upon under “normal” conditions. Market value, by contrast, is the price at which a property will actually sell for.

What is a purpose of appraisal?

An appraisal is a written document that shows an opinion of how much a property is worth. The appraisal gives you useful information about the property.

What mandates the use of an appraisal report?

USPAP was adopted by Congress in 1989, and contains standards for all types of appraisal services, including real estate, personal property, business and mass appraisal. Compliance is required for state-licensed and state-certified appraisers involved in federally-related real estate transactions.

What is the difference between an appraisal and an appraisal report?

An appraisal is a process by which an appraiser estimates their opinion of the value of a property, including a walkthrough inspection and current market research. The appraisal report is the culmination of the home appraisal process, where the appraiser summarizes their findings.

What happens if I don't agree with my appraisal?

An appraisal review you disagree with is not the end of the world, though it might feel like it. If you want to appeal the decision, make sure you do a thorough self-analysis, counter the review with solid facts and have a civil sit-down with your boss.

What are the three main purposes of appraisals?

Performance appraisal has three basic functions: (1) to provide adequate feedback to each person on his or her performance; (2) to serve as a basis for modifying or changing behavior toward more effective working habits; and (3) to provide data to managers with which they may judge future job assignments and

How to get an Illinois real estate license through reciprocity?

Hear this out loudPausea) You must be actively licensed by examination in the state from which you are applying. b) Illinois must have a written reciprocal agreement with the state in which you are currently licensed by examination. c) You must take and pass the Illinois portion of the licensure examination.

Does Illinois and Florida have real estate license reciprocity?

Hear this out loudPauseIf you have an Illinois Broker license you can get the Florida Sales Associate license. If you have an Illinois Managing Broker license you can get the Florida Broker's license. Florida Broker licensees can sponsor themselves as long as they have an office for that license in Illinois or in Florida.

Can I use my Illinois real estate license in Texas?

Hear this out loudPauseDoes Texas have real estate license reciprocity? Unfortunately, Texas doesn't have reciprocity with any other states. Because there is no Texas real estate reciprocity, if you want to get your license in Texas, you must satisfy all Texas licensing requirements.

Does Indiana have reciprocity with Illinois real estate?

Hear this out loudPause*Indiana and Illinois only share BROKER reciprocity, not Managing Broker. Illinois REALTORS® suggests using the Leap Online Exam Prep and ExamSmart programs. They offer a randomized variety of questions, much like those on the licensing exam.

Who is allowed to perform appraisals on any type of real estate?

An appraisal can only be performed by a licensed appraiser. While the licensure process differs from state to state, the appraiser must have the licensure required by the state. Real estate agents can offer their opinions of value (like in a CMA), but that is not an appraisal.


Who typically performs an appraisal?
Appraiser An appraiser is a trained and licensed real estate professional who is regulated by state appraisal boards and must follow federal, state and local laws and regulations. Each appraiser is required to remain independent and objective—meaning they can't be influenced by a buyer, seller, realtor or lender.
What is the difference between a CMA and an appraisal?
The appraisal value is used by lenders to establish the amount a buyer is approved for. The key difference is a CMA establishes a home's price, whereas an appraisal establishes its value—price is what you pay for something while value is what it is worth.
Who determines the type of appraisal report?
The lender or its agent contacts a state licensed or certified appraiser and identifies the property to be appraised and the intended use of the appraisal. The appraiser then determines the appropriate scope of work for the assignment.
Who are the two people that can conduct the appraisal?
The assessment process is usually facilitated by Human Resources, who assist managers and supervisors in conducting the individual appraisals within their departments. An assessment method should be established. Required competencies and job expectations need to be drafted for each employee.
Why is an appraisal important in real estate?
If it is a purchase-and-sale transaction, the appraisal is used to determine whether the home's contract price is appropriate given the home's condition, location, and features. In a refinance transaction, the appraisal assures the lender that it isn't loaning the borrower more money than the home is worth.
What is the reason for appraisal?
Appraisals are necessary when buying and selling a home because banks won't lend money if the appraised value of the house is less than the loan amount. However, there are other times when an appraisal may be required or can help save you money.
Who is the appraisal important to during a real estate transaction?
Appraisals are required whenever a property purchase or sale involves a bank or mortgage, as the bank wants to ensure the home is sold for what it's worth. An appraisal is also used to determine the property taxes the county will charge every year.
Why is so important to appraisers in the development of highest and best use and developing value opinions?
This analysis allows appraisers to understand what form of development will be most profitable at the site and even accounts for adaptations within legal limitations. It is important to note that this analysis does not provide clear insight into the subject property's potential selling price.
What are the three importance of appraisal?
Performance appraisals are essential for the growth of a company and the employee. It helps the company to find out whether the employee is being productive or is a liability. It helps the employee to find out where his / her career is heading. It is an essential part of HR management.
What does an appraiser do first when given an assignment to appraise real property?
Identify the client and owner of the property (may be the same). Identify the intended use of the appraisal. Identify the effective date of the value opinions. Identify ownership interest to be valued (usually 100%) and any encumbrances or restrictions thereon.
What is the main task of the appraiser in the appraisal process?
An appraiser is someone who uses their analytical skillsto evaluate and assign value to a product, piece of machinery, intellectual property, real estate or commercial entity.
What kind of data does the appraiser collect about the subject property?
Subject property information may be obtained from one or more data sources. The appraiser can accept data, photos, floor plans, and other information from a party who has a financial interest in the sale or financing of the property if the appraiser verifies such data from a disinterested source.
What are the 7 steps of the appraisal process?
Steps in the Appraisal Process
  • Frame the purpose or identify the problem.
  • Record the data needed and its sources or references.
  • Collect, document, and verify the data.
  • Collect, document, and verify the data for each approach.
  • Examine and analyze the data.
  • Reconcile data for the final estimate.
  • Draft an appraisal report.
How is the effective date of the appraisal determined?
A: The effective date is usually the date of inspection or a specific date provided by the client, often in cooperation with the insurance company. Sometimes a client is changing coverage and will ask that the effective date coincides with the policy enrollment.
Which two dates must be stated in the appraisal report?
I always include this statement: Appraisal assumes there have been no changes to the subject property between the effective date of the report and the date of inspection. Or, I discuss any changes between the two dates.
What is the effective date of the appraisal update?
The effective date of an appraisal update must be no more than 120 days before the Note Date.
What is the date of the appraisal also known as?
Effective Date - The date to which an appraiser's analyses, opinions, and conclusions apply; also referred to as date of value. (USPAP, 2020-2021 ed.)

What is a real estate appraisal based on

What is the effective age of an appraisal? The effective age is calculated by taking the percentage of the remodeling or modernization in relation to the whole. For example: 50% of the total structure of a house is 40 years old, 20% is 20 years old, and 30% of the structure is 5 years old. 0.50 X 40 = 20.0 years.
What states can I use my Illinois real estate license? RECIPROCAL LICENSING
  • You would have a license in both states.
  • Currently Illinois has reciprocity with Colorado, Connecticut, Florida, Georgia, Indiana, Iowa, Nebraska, and Wisconsin (some states call it mutual recognition).
What states have reciprocity with Illinois for real estate license? IL Reciprocal License Reciprocal licensing is where you, as a non-resident, can obtain a real estate license from another state with minimal effort. You would have a license in both states. Currently Illinois has reciprocity with Colorado, Connecticut, Florida, Georgia, Indiana, Iowa, Nebraska, and Wisconsin.
Where can I use Illinois real estate license? Real Estate License Reciprocity
  • Currently Illinois has reciprocity with the following states under the Real Estate License Act of 2000:
  • Colorado Department of Regulatory Agencies.
  • Division of Real Estate.
  • CONNECTICUT Department of Consumer Protection.
  • FLORIDA Department of Business and Professional Regulation.
Can I transfer my Illinois real estate license to another state? License reciprocity means that, if you already hold an active real estate license in one US state, you can apply for a real estate license in your new state without taking all the state-required pre-licensing real estate courses.
What is reciprocity for Nevada real estate license? If you're already a licensed real estate agent, The Nevada Real Estate Division may recognize your salesperson or broker status from a different state. This expedited licensing process is called reciprocity, and when used, will cost you less time and money becoming an agent in Nevada.
Can I use my Nevada real estate license in Texas? Reciprocity Real Estate Laws in Texas Unfortunately, Texas doesn't have reciprocity with any other states. Because there is no Texas real estate reciprocity, if you want to get your license in Texas, you must satisfy all Texas licensing requirements.
Can I transfer my Nevada real estate license to California? Although there isn't any California real estate license reciprocity, there are options so you may not have to start from scratch. Agents don't have to be a resident to get a California real estate license, but they do have to meet all the education requirements and pass the state exam.
What disqualifies you from being a real estate agent in Nevada? The Nevada Division of Real Estate may deny you a license if you have been convicted of or entered a plea of guilty, guilty but mentally ill, or nolo contendere for embezzlement, obtaining money under false pretenses, extortion, conspiracy to defraud, practicing real estate without a license, or any crime involving
Which states accepy my nevada real estate license A Quick Overview of Real Estate License Reciprocity in Nevada · Arizona · Colorado · Delaware · Idaho · Kentucky · Minnesota · Texas · Utah 
What states are reciprocal with illinois real estate license? Currently Illinois has reciprocity with the following states under the Real Estate License Act of 2000: · Colorado Department of Regulatory Agencies · Division of 
What is the appraisal reviewing process called? This process is called reconciliation. *Reconciliation. An appraiser develops several different indicators of the subject property's value. Those indicators may be derived by analyzing data from different comparable properties, or by using different units of comparison or different appraisal techniques.
What is an appraisal review? What is an appraisal review? In general terms, an appraisal review is a formal evaluation of the quality of an appraiser's work, performed by another appraiser.
What does an appraisal revision mean? Sometimes some of the requirements from the Lender do not make it to the engagement letter, which means a revision is needed, so a revision request is sent out to the appraiser, note: with each revision made to the appraisal a new signature date is required (date of change or date of the revision which must be applied
What is step 4 of the appraisal process? Step 4: Compare actual performance to performance standards In this step of the appraisal process, actual performance is compared to the performance standards.
What are the different types of appraisal reviews? Types of appraisal review reports The type of report is generally dictated by the client, based on discussion with the appraiser who is performing the review. The four most common report types for reviews include form reports, checklists, narrative reports, and oral reports.
  • What states have reciprocity with Kentucky real estate?
    • Our 100% online KY Reciprocal Licensing Course is the first approved course by the Kentucky Real Estate Commission to cover the full 40-hour requirement for obtaining a reciprocal real estate license in the state of Kentucky with an active Sales Associate or Broker's license in Ohio, Tennessee, Florida, or West ...
  • Does Kentucky have real estate reciprocity?
    • GET YOUR RECIPROCAL KENTUCKY REAL ESTATE LICENSE. Do you have a real estate license in Tennessee, Ohio, Florida, or West Virginia and want to get a real estate license in Kentucky? Enroll in our Kentucky Reciprocal License Course & satisfy all of the educational requirements to get a KY license.
  • Does Tennessee have reciprocity for real estate license?
    • Tennessee does not offer reciprocity with other states in regards to real estate licenses.
  • Does Ohio have reciprocity with Kentucky real estate license?
    • This is where the fun begins. Ohio and Kentucky Real Estate Commissions have reciprocity agreements with each that allows licensed agents from the other state to get licensed easier in their state.
  • How do I apply for reciprocity in Kentucky?
    • To apply;
      1. Fill out the Kentucky Reciprocity Application and the KRED Reciprocity Form.
      2. Attach supporting documentation. A copy of basic training graduation certificate. A copy of basic training transcript listing each individual class completed in basic training and the individual clock hours per class.
  • How do I get my real estate license in KY?
    • Requirements for a Kentucky Real Estate License
      1. Be 18 years of age;
      2. Have attained a high school diploma or GED;
      3. Completed all real estate pre-license courses prior to taking the real estate examination;
      4. Complete FBI criminal background check; and.
      5. Must apply within sixty (60) days of passing their exam.
  • What is an estimate of the value of a property called?
    • An appraisal is an opinion or estimate regarding the value of a particular property as of a specific date. Appraisal reports are used by businesses, government agencies, individuals, investors, and mortgage companies when making decisions regarding real estate transactions.
  • What is an opinion of value real estate?
    • An opinion of market value is an estimate of how much a property is worth in any given market. An opinion of value is reached by using one of three standard approaches: The Cost Approach estimates what it would cost to replace or reproduce the improvements as of the date of the appraisal.
  • What is the process of estimating value called?
    • The appraisal approach describes the process of estimating an asset's value, based on factors such as its cost, the income it generates, and its fair market value (FMV) compared to that of similar assets.
  • What is the terminology of appraisal?
    • Appraisal - The act or process of developing an opinion of value; an opinion of value. (USPAP, 2020-2021 ed.) Appraisal Report - Any communication, written or oral, of an appraisal that is transmitted to the client upon completion of an assignment.
  • What is an estimate of the current value of the property called quizlet?
    • Appraisal. An estimate of the current value of the property.
  • What states have reciprocity with South Carolina real estate license?
    • South Carolina offers license reciprocity for North Carolina, Georgia, and West Virginia. That said, whether or not your license will be accepted all depends on the strength of your education and experience.
  • Can I transfer my SC real estate license to Florida?
    • If you already hold a real estate license from another state, you have few options to obtain your real estate license in Florida. Florida has mutual recognition with 10 states: Alabama, Arkansas, Connecticut, Georgia, Illinois, Kentucky, Mississippi, Nebraska, Rhode Island and West Virginia.
  • Can I transfer my NC real estate license to SC?
    • South Carolina accepts licensees from other states. However, you must pass the South Carolina portion of the real estate exam, hold your license for six months before applying for reciprocity, get a background check, complete a verification of lawful presence affidavit, and submit an application.
  • What states have real estate reciprocity with North Carolina?
    • North Carolina does not have a formal reciprocity arrangement with any other states. However, out-of-state agents can speed up the North Carolina licensing process by getting the education portion waived. The prospective agent's place of residence does not impact their ability to become licensed in North Carolina.
  • Does Georgia have reciprocity with South Carolina real estate license?
    • The South Carolina Real Estate Commission offers full reciprocity for Georgia residents who are qualified through written examination within Georgia and who also hold an active real estate license in Georgia.

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