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How are appraisals calculated?

How are appraisals calculated?


If you are getting ready to make a major real estate transaction, like buying your first home or upgrading to a larger property, appraisal is going to be an important step in the process. There are some key points that we emphasize to our clients at Mortgage Maestro Group when it comes to appraisals, which can help make the process go as smoothly as possible.


We’ve talked about reassessment here on the blog before, which is when a municipality like a village or a town assigned each property an updated market value for tax purposes. An appraisal is essentially the same process, except these valuations can be done at any relevant time-for example when you are going to take out a mortgage on a new home. An appraisal is an unbiased professional’s assigned value for a home or property. This value takes several things into account like the date of construction, square footage, facilities, surrounding properties, the local and national real estate market, materials, proximity to urban areas, etc. An appraiser will perform an inspection and then issue a report on all of these factors.


An appraisal typically takes between a week and ten business days, depending on the demand in the local market. It can take a little longer if things are really busy. You can also expect to spend $600-$850 for your appraisal, depending on the size of a property, location. More complex homes and loan programs can increase the cost of your appraisal. Your appraisal report should include photographs of the property, a location map, a comparable grid for similar sales in the area, and tax records. If you have any questions about the content of your appraisal report, we would be happy to review it for you.


It is easy to assume that an appraisal is used to get a property value for someone buying or selling a home, but there is a third party involved. Appraisals are very important for mortgage lenders, who have the job of issuing mortgages that are required to be repaid. An independent third party in the middle has the job of determining the value from objective factors, independent of these incentives. The appraisal report itself, is used by the lender for purposes of lending on the collateral (house) they are borrowing against.


One of the biggest misconceptions about appraisals is finality. In the same way you can challenge a municipal reassessment of your property, there are steps you can take to combat an inaccurate appraisal. Appraisers are humans, so they can make mistakes just like everyone else or bring their own biases along for the ride. There are many legal protections in place guarding against biased appraisals and other real estate practices, so if you are unhappy with yours, remember that there are plenty of options at your disposal. Sometimes this can be as simple as noting errors in your appraisal report, and correcting those with your original appraiser. Have questions? Reach out to Mortgage Maestro Group at 303-779-0591.

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