It should be noted that an inspection is not the same as an appraisal, and the professionals conducting each have entirely different qualifications and requirements. Inspectors determine if there are problems or hazards with a home that could result significant expenses after someone’s bought a home—including problems with plumbing, air conditioning, roofing and chimneys.
Appraisers don’t run those kinds of diagnostics. They evaluate elements and features of the home to establish how they add value to the baseline market price. These factors include the number of bedrooms and bathrooms, lot size, garages, swimming pools, and other amenities. Wear-and-tear plays a part in an appraiser’s findings, but only in its effect on the home’s monetary worth.
An appraiser’s role is that of an unbiased and impartial third party who offers highly educated estimates of the value of an entire property—not just the structure, but also the land on which it stands. Neutrality is an important attribute to an effective appraiser, as are their market knowledge, experience and professional certification.
They can take one of a few approaches to arrive at their evaluations:
Sales Comparison. This is the most common approach for most homes on the market. The appraiser compares the house and property with other, similar ones, optimally in the same general area as the home in question.
Cost Approach. This is primarily reserved for new houses for which immediate comps might not be available. The cost approach tries to determine how much it would cost to restore or replace the house in case it’s destroyed.
Income Approach. Rather than estimating a home’s worth, this approach finds the fair rental value of a given property.