There are many reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:

·  To obtain a loan.

·  To lower your tax burden.

·  To establish the replacement cost of insurance.

·  To contest high property taxes.

·  To settle an estate.

·  To provide a negotiating tool when purchasing real estate.

·  To determine a reasonable price when selling real estate.

·  To protect your rights in a condemnation case.

·  Because a government agency such as the IRS requires it.

For more details on when you might need an appraisal click here: Why an Appraisal?

One thing to keep in mind is that a real estate or property appraiser is NOT a home inspector, and he or she will not carry out a complete home inspection. The appraisal deals only with the value of the property itself, not the condition that the house is in.

A typical home-inspection is an assessment of the functional systems and the physical structure of the house, from the basement to the foundation and up to the roof. This should include (but is not limited to) evaluating the state of the plumbing, the electrical wiring, the house’s air conditioning and/or heating, insulation, interior and exterior walls, floors and ceilings, opening apertures such as doors and windows, the basement, foundations, and the roof and attic.

The difference between a proper real estate appraisal and a CMA can be seen as the difference between black and white. A home appraisal from a licensed appraiser utilizes comparable sales data from homes specifically related to yours, while a CMA uses vague “market trends” to come up with their valuation. The other major difference is that an appraisal factors in items such as the condition of the house, local construction costs, and the exact location and neighborhood of the property to give a considered estimate of value that is documented and can be proven and justified. A CMA is only capable of giving a rough estimate.

Perhaps the greatest difference is in who actually prepares the report in question. The CMA is prepared by a realtor or real estate agent, who doesn’t have a full comprehension of valuation methods. A home appraisal is created by an independent, licensed professional (the appraiser) who’s  full-time job is estimating the value of homes and residential properties. Another salient factor is that the real estate agent gets a commission based on the value of the home and is therefore not totally independent, whereas the appraiser has no vested interest whatsoever in the property’s final valuation.

Every appraisal report has to contain a defensible and carefully documented estimate of value, and in addition clearly identify the following points:

• The client and other intended users
• The intended use of the report
• The purpose of the assignment
• The type of value reported and the definition of the value reported
• The effective date of the appraiser's opinions and conclusions
• Relevant property characteristics, including location attributes, physical attributes, legal attributes, economic attributes, the real property interest valued, and Non real estate items included in the appraisal, such as personal property, including trade fixtures and intangible items
• All known: easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature
• Division of interest, such as fractional interest, physical segment and partial holding
• The scope of work used to complete the assignment