With so much on the line, choosing an experienced appraisal service that can determine an accurate value is a must. Of course, this begs the question: is property appraisal an art or a science?
The answer? Property appraisal should involve a little bit of both. This combination of factors is exactly why one appraiser may determine the value of a property at $150,000 and another appraiser may calculate the value of the exact same property at $145,000.
By having a better understanding of the art and science that goes into appraising a property, buyers and sellers can have a better idea of what to expect from the process and how to choose an appraisal company with their best interests in mind.
The “science” aspect of property appraisal refers to specific calculations that any appraiser can make based on objective facts and data about the property itself. Some scientific factors that may come into play when it comes to an appraisal include:
Meanwhile, there are also individual state requirements that appraisers must follow when determining the value of a property. This, on top of laws like the Dodd-Frank Act, aim to make real estate appraisal as objective and scientific as possible.
When considering the “science” of a property appraisal, it is also important to understand that appraisers have specific guidelines they must follow. For example, appraisers are required to find a certain number of comparable properties (usually at least three) that will be used in determining the value of the one in question. These properties must meet specific parameters and be as similar as possible to the property being appraised.
Ultimately, most appraisers determine value by assigning a price per square foot to the property and then multiplying that value by the total square footage of the building. This, again, is where scientific fact comes in.
For instance, if a home is appraised at $100 per square foot but the home is incorrectly calculated at 2,000 square feet vs. 2,100 square feet, this can result in a whopping $10,000 difference in appraised value. As you can probably imagine, this notable disparity can mean the difference between a buyer being able to secure financing and not being able to secure financing.
Although there is a fair amount of science that goes into calculating the appraised value of a property, some would argue that the process is more of an art than a science. That’s because appraisers are required to use a lot of their own personal judgment when doing their jobs.
One of the most subjective aspects of real estate appraisal comes down to determining a value per square foot. While there are certainly some scientific factors that come into play when determining a price-per-square-foot (such as total lot size, the age of the building, the number of rooms, etc.), appraisers always have to make some personal judgments in this regard as well.
For example, an appraiser must consider the special features or amenities that a comparable property may not have. In a residential appraisal, this may include a built-in swimming pool. If the comparable properties do not have a swimming pool, it will be up to the appraiser’s discretion to determine how much (if any) resale value the pool adds to the home. This value must then be added to the appraised value, which is then divided by the total square footage of the home to determine the cost per square foot.
Other less objective factors that the appraiser may need to consider when determining the value of a property include:
Ultimately, an experienced and fair real estate appraiser uses as much objective science and data as possible when determining the value of a property. Still, there is no denying the fact that subjective opinion and interpretation (“art”) comes into play with any residential or commercial appraisal.
At the end of the day, the most knowledgeable and experienced appraisers will be able to agree upon a fair value for any property. And while there may be some variation between one appraiser’s value and the next, the difference should be minimal.
With so much at stake, choosing the right appraisal service is a must if you’re looking to purchase a residential or commercial property. Ideally, you’ll want to select an appraisal service that uses as much objective data as possible to determine a fair value.
At AmeriMac, we specialize in commercial, residential, and even desktop appraisals to suit your needs. All of our appraisers follow strict compliance regulations and have extensive knowledge of their geographic markets to provide you with an accurate report in minimal time.
To find out more about our appraisal services or to schedule your appraisal, reach out to our team today, You can get in touch with us through our online contact form or by calling us directly at (866) 744-1641.