Getting ready for an typical real estate appraisal of a home is not complicated. Once the loan application has been approved, an appraiser is assigned to the property either by the lender, or in the case of loans for veterans, by VA itself.

The lender must provide the assignment order form along with a sale contract. Recent changes in the law require that appraisers dealing with a sale situation must review and analyze the sale contract. Refinances and other types of requests will of course not have a sale contract.

Ready access to the property must be available to avoid delays. Most appraisers are members of the local Board of REALTORS and normally possess a lock box key. This helps the tenant feel more secure since they are already familiar with the agent.

It is always helpful for home owners to have their homes clean and in order. Appraisers are by tradition looking at a home from the viewpoint of a buyer, so a good impression is important. By the same token, appraisers often encounter a home when the owner is in the process of moving out, so boxes and other items are sometimes in disarray. This is okay. Appraisers understand this and are more concerned about being able to have full access to all areas, including the garage, than how the moving items look.

The appraiser is likely going to need to take measurements of the interior of the garage and look into water heater and AC closets, so be sure these areas are as clear and accessible as possible. The appraiser’s worst enemy (next to a thunderstorm) is thorny or impassible shrubs or trees next to the house. They need to be able to use a measuring tape along each outside wall.

Copies of seller disclosure notices are always welcome along with lists of recent sales and other marketing information. It’s hard to give an appraiser too much information. Especially useful is a copy of a recent survey.

It is not normally necessary for the owner to be absent during the appraisal. Most appraisers don’t mind if someone is there, especially when there are pets around. Burglar alarms should always be left off if the appraiser is allowed to visit the home when no one is there.

Real estate appraisers are pretty easy going folks. They want and need your cooperation as much as you do theirs. The modern appraiser typically approaches a job with an open mind.

Commercial real estate appraisal is a combination of art and science. Knowledgeable appraisers gather and analyze data prior to making informed decisions about real estate value. The appraisal profession has developed a series of well-established analytical techniques; the cost approach, income approach and sales comparison approach. The most appropriate approaches depend upon the characteristics of the subject property.

The cost approach is considered most applicable for commercial real estate appraisals for relatively new properties and special-use properties. Commercial real estate appraisers are less likely to use the cost approach for older properties due to the difficulty of precisely calculating the amount of depreciation.

The income approach is considered most applicable for investment or income properties. Appraisers gather data regarding the actual income and expenses for the subject property, rental comparables, expense comparables, industry expense data, market occupancy, and rental market trends. The commercial real estate appraiser then estimates gross potential income, other income, effective gross income, operating expenses, and net operating income. Net operating income is converted into an indication of market value using a conversion factor termed the capitalization rate, using the following formula:

Market value = net operating income/capitalization rate. This process is termed direct capitalization.

The income approach can also be calculated using a discounted cash flow analysis. Revenue and expenses are estimated for a period of years and the resulting annual cash flows and gross proceeds from a projected sale of the property are discounted to a present value using a discount rate.

Commercial real estate appraisers also utilize the sales comparison approach to estimate market value. The sales comparison approach is often considered most comparable for owner-occupied properties. After obtaining data regarding similar properties that recently sold, the appraiser makes adjustments to generate an indication of market value for the subject property.

After considering each of the three approaches to appraisal and preparing an analysis for the approaches which are considered relevant, the appraiser reconciles the indications of value to a final value conclusion. The quality and quantity of data for each of the approaches is considered when reconciling to a final value conclusion.