A to Z of Real Estate – The Letter A
What Is a Home Appraisal?
A home appraisal is a detailed, professional estimate of a property's value, performed by a licensed appraiser. It's required by lenders in most home purchases, sales, and refinances to confirm the home is worth the money being borrowed against it.
Appraisal, Explained
When you buy, sell, or refinance a home, one number carries a lot of weight: the appraised value. An appraisal is a professional, unbiased opinion of what a property is worth — and it's one that only a licensed appraiser can provide.
That's an important distinction. A real estate agent can prepare a CMA — a comparative (or complimentary) market analysis — to help you understand pricing. It's a valuable pricing tool, but it isn't an appraisal. An appraisal is far more detailed, and when a bank is involved, it's the appraisal that counts. Whether there's a seller, a buyer, or a homeowner refinancing, if a lender is part of the deal, an appraisal is almost always required.
How an Appraisal Works
An appraiser follows a consistent process to arrive at a valuation:
- Inspection and notes. The appraiser evaluates the home — its overall condition, any improvements or upgrades, and the measurements inside and out.
- Comparable sales ("comps"). They compare the property to recently sold homes in the same area that are similar in size and type. A five-bedroom home isn't measured against a three-bedroom home — the comps have to genuinely match.
- The final report. The appraiser compiles everything — condition, comps, and improvements — into a detailed report that assigns the home a value.
Why It Matters
In real estate, a deal really comes down to three things: a willing seller, a willing buyer, and — just as importantly — an accurate appraisal. Even when a buyer and seller agree on a price, the lender needs the appraisal to confirm the home supports that number. It protects everyone in the transaction, and it's a step our team helps clients navigate on both the buying and selling side across Bergen, Passaic, and the surrounding areas.
Appraisal FAQs
What's the difference between an appraisal and a CMA?
Who orders the appraisal — the buyer or the seller?
Is an appraisal required to refinance?
What does an appraiser actually look at?
Video transcript
Today we're going to talk about the A through Z of real estate, and we're going to start off with the letter A: the appraisal.
Understand that only a licensed appraiser can give an appraisal. Realtors offer what's called a CMA — a complimentary or competitive market analysis — but an appraisal is much more detailed. And an appraisal is very important in today's day and age. When we're dealing with a bank, whether it's a seller, a buyer, or someone refinancing, an appraisal is required.
So how does it start? An appraiser first takes notes on the home, taking into account the condition, the improvements, and the measurements inside and out. Then they compare it to what's called comps — recently sold homes in that area that are comparable in size. You're not going to compare a five-bedroom house to a three-bedroom house.
After the appraiser has done this, they compile their notes and give a detailed report based on the condition, the comps, and the improvements to give a valuation of the home.
Remember, when it comes to real estate, you need three things: a willing seller, a willing buyer, and most importantly, an accurate appraisal. And if you need to know more about the A through Z of real estate, give us a call at any time. Have a great day.
Questions About Your Home's Value?
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