Real Estate Law: Understanding the Appraisal

An appraisal is a professionally judged opinion on the value of something—in this case, a home or some other form of real estate—usually based on the market value. Whether you are looking to obtain a mortgage to buy a home, or you want to refinance an existing mortgage, your lender will likely require you to obtain a professional appraisal of the property.

Lenders usually require an appraisal in order to determine if the home could actually be sold for the price that the buyer is going to pay, and if an appraisal is significantly lower than the asking price, the lender may not issue the loan.

In Florida, appraisers must be professionally licensed to conduct real estate valuations. In order to obtain this license there are numerous education requirements that must be fulfilled, as well as both national and Florida-specific appraiser exams and on-the-job training requirements.

There are also three different levels of real estate appraisers in Florida based on the level of education and experience: Registered Trainee Appraisers, Certified Residential Appraisers, and Certified General Appraisers. The specific details of the property, such as size and whether it is commercial or residential, will determine which type of appraiser is qualified to conduct the appraisal.

If you are purchasing a home or refinancing a mortgage, you will need a residential appraisal. In conducting a residential appraisal, the appraiser will look at a number of factors in determining the value—some of which are within the control of the owner.

We have detailed some of the most important factors below:

Square Footage – The appraiser will look at the overall square footage of the home and the property itself. In most—but not all—circumstances, the more square footage and acreage a property has, the higher the appraisal.

Bedrooms and Bathrooms – The number of bedrooms and bathrooms will also factor into the valuation. As with square footage, more bedrooms and bathrooms generally correlates with a higher valuation. What qualifies as a bedroom may vary depending on the locale, but generally if the room has a closet, at least 70 sq. ft. of space, and is not used to access another area of the home besides a bathroom, it can be considered a bedroom.

Features – The appraiser will consider all the features of the property. Each home is unique, and features like a pool or elegant landscaping will factor into the value.

Recent Comps – In real estate lingo, the term “comps” refers to comparable properties, or other homes that have a similar number of bedrooms, bathrooms, acreage, and square footage, and are also located in the same general area or neighborhood. Appraisers will look at comps that have recently sold in the area to get an idea of how much the home in question could reasonably be sold for.

Current Competing Listings – Comps that are currently for sale in the area also factor into the home valuation. If there is a similar home for sale in the same neighborhood for much less than the home in question (all other factors being equal), then the appraiser may decide that the value of the home you are looking at should be lower based on the competition in the current market.

There are sometimes steps you can take to help the appraisal value of a home. To learn more, or for assistance in any other aspect of purchasing or selling real estate, please contact the Law Office of Ray Garcia today.