LaPlante Appraisals' Blog

The average person doesn't fully understand what is in an appraisal or what goes into creating a appraisal report. We are going to break down the appraisal process in order to better educate the general public. 

Last month we discussed why you need an appraisal. If you haven't read it yet, check it out below.

After a bank orders an appraisal, the order is sent to a certified/licensed appraiser who will analyze the market, record and report characteristics and data from the site visit. Then the appraiser writes a report for the lender (or client) to fully understand the property's condition and market trends. Most the time, lenders and underwriters reviewing an appraisal aren't even in the same state as the subject property. Therefore lenders rely heavily on the appraiser to paint a overall picture of the property, its neighborhood and the condition it is in. 

Steps to creating an Appraisal: 

1. The first step is to pull public data for the subject. This is where an appraiser will "look up the property" to get an idea of the size, condition and location. This is an appraiser's initial insight into the complexity of the property. Luckily, here in Phoenix Arizona, Maricopa County does a great job providing sketches, and most of the time, accurate data. 
2. Next the appraiser schedules a time to go to the property to collect first hand data, such as gross living area (the size), physical characteristics, and confirm any data that was initially pull from public data sites. Occasionally, there are minor additions or changes that were made to the building plans that are not recorded with the City or County. This is why measuring the subject (via technology such as a laser, phone technology, or a wheel tape measurer) is so important. The appraiser needs to confirm the data found on public data sites were correct. While on the site visit, the appraiser records details about deferred maintenance, updates and improvements made, additions and/or discrepancies. 
3. After the appraisal site visit, the appraiser imports all the data collected into a software for report writing. This step can be the most tedious, depending what was discovered at the time of the site visit. Sometimes additional research needs to be conducted if, for example, an appraiser finds out there is a Casita/ADU/Guest House on the property. Or there are solar panels or an addition to the main dwelling that were not recorded on public data sites. The appraiser then goes into investigator mode calling the appropriate authorities to determine if such discrepancies are legal, allowed, and/or permitted. 
4. Next is data analysis. Appraisers do not just "come up with a value" or "pull adjustments out of thin air." We are required to analyze the market through various different methods for the purpose of determining what the average buyer is willing to pay for an amenity or additional bathroom/bedroom. There are many different methods, as stated above, however it really depends on the amount of data available to the appraiser. In some rural areas, there is less public data available to an appraiser. Or if the market is slower and there are limited sales and listings available, this can sometimes limit the data pool that an appraiser is analyzing. Therefore, this step is also very time consuming and tedious. 

5. Next, report writing. This is one of the last steps in the appraisal process. After the data is analyzed, facts have been checked and confirmed with city professionals and ordinances, the appraiser can start writing. Remember, the appraiser is writing a report to articulate clearly the location, characteristics, condition, amenities and any marketability challenges the subject may have. 

Overall the appraisal process can take 7-15 hours, maybe more from start to finish. It is more than a site visit, sometimes that's the easiest part of the entire process! There is a large amount of research, analysis and investigating required to report accurate and credible results for the reader. As an owner or seller, you may just see the site visit and the end result, but know the appraiser is spending a significant amount of time in their office writing up the appraisal report.