My day
job is as a real estate appraiser with Pierce
Appraisal Service. I've been a licensed appraiser since 1998. I was a sales
agent for 10 years prior to that. I found that being a sales agent didn't fit
my schedule very well with all the weekend showings conflicting with my music
schedule. The appraisal business is pretty much a Monday through Friday deal.I enjoy putting together the puzzle that is an appraisal. It starts with a visit to the house for an inspection. I gather as much information as I can on the site. Information such as a the type and age of construction. There are typically 3 different types of construction, stick built, modular and manufactured. Stick built is the most expensive, manufactured (double wides & mobiles) being the cheapest. Once this is determined we get a room count, make a drawing of the lot and the house, and make notes of additional features such as porches, garages, decks, patios, finished basements, pools, sheds, etc. A good appraisal also includes notes of the neighborhood qualities such as proximity to shopping, schools, parks & recreation, etc. Conversely, a property could have some negative neighborhood qualities such as a dump yard across the street or a smelly factory, etc. And, of course there is a big difference between the value of a typical city lot as compared to a lake-front lot. Other notes are made concerning the electrical, plumbing, substructure, water supply, septic, well, type of roofing and siding, etc. Snap a few photos and it's back to the office.
When I get back to the office, I'll gather additional information and start assembling the puzzle. The lending institutions will want to see all of the info above (plus much more that I won't bore you with). But most importantly, using the comparison approach, its evaluation for similarity to three homes that have sold within the past 6 months. I'll do a search of all homes that have sold in the immediate vicinity. Sometimes I get lucky and get the three that I need to finish the puzzle. More times than not, I have to expand the search to a bigger neighborhood until the suitable three are found. Then it's just a matter of comparing and making adjustments for square footage of the houses and lots, age, number of bedrooms & baths, garages, decks, porches, patios, finished basements, etc. until a value is reached.
The lender and underwriter will also want to see a cost approach to the house. The idea here is that the cost of the lot and all the building costs should be similar to the comparison approach described above. Otherwise it wouldn't make sense, for example, for someone to pay a lot more for a property than it would cost to buy a lot and build the same structure from scratch.
After a number or value is established the photos are inserted, a read through is done, maps are made of the subject property and all of the comparables, a letter of transmittal is typed up, the 12-15 page report is printed and mailed off to the lender. In a nut shell this is the appraisal process that I do on a daily basis.