A property appraisal is an important step in the real estate transaction process. Here is what you need to know about property appraisals:

Why is property appraisal needed? An appraisal determines the estimated market value of a property based on several factors like property condition, age, size, amenities, recent selling prices of comparable properties, location, demand-supply dynamics, zoning laws, etc. Appraisals are required for:

• Mortgage approval: Lenders need to ensure the requested mortgage amount is justified based on the property value before approving a home loan.


• Property insurance: Insurance companies require an appraisal to determine adequate coverage based on replacement cost of the property.


• Tax assessments: Property taxes are calculated based on the appraised value of the real estate. Annual appraisals may be needed for reassessment.


• Pre-purchase evaluation: Homebuyers need to determine a fair offering price based on the appraised value of the property. Sellers also get an estimate of the right asking price.


• Estate evaluations: Appraisals are required to determine the market value of properties held by an estate for division of assets or sale.


• Litigation support: Professional appraisals may be needed to settle lawsuits related to mortgage fraud, property disputes, condemnation, bankruptcy, etc.

Who performs the property appraisal? A certified real estate appraiser will evaluate the property based on an interior and exterior inspection. The appraiser determines the property condition, construction quality, number of rooms, age, size, special features and recent neighborhood sales to complete an independent market analysis. What does a property appraisal report contain? The final report from the appraiser includes details like:

• Property information: Photos, sketches, square footage, number of rooms, amenities, age, zoning, etc.


• Location details: Neighborhood profile, sales of comparable nearby properties, new developments underway, distance to amenities, public transit, employment hubs, floor plans, etc.


• Exterior inspection: Specifics about lot size, landscaping, parking, fencing, condition of foundation, siding, roofing, gutters, driveways, walkways, pools, decks, patios, outbuildings, easements, etc.


• Interior inspection: Number, size and functionality of rooms, flooring, windows, lighting, plumbing fixtures, cabinetry, appliances, basement, attic, wall and roof insulation, heating/cooling systems, fireplaces, stairs, railings, etc.


• Sales comparison analysis: Features recent selling prices of properties comparable in size, age, construction and amenities to determine the subject property's fair market value.


• Final value conclusions: The appraiser's professional opinion on the estimated market value or replacement cost of the property based on the collected data, property condition and current market factors.


• Certification: Includes the appraiser's information, fees, credentials, inspection dates, appraisal report date and a certified statement of the final value conclusions.