Comparing one property to others in the area is the most customary appraisal route for existing homes. The comparisons (comps) are generally found with the help of the Multiple Lister Service and sold property records, and are ideally located very close to the house being prepared for market, preferably in the same subdivision or neighborhood. Homes with relatively recent sales dates are also favored, since they could serve as a general barometer for the current market. The comps should match the sale property as much as possible in lot size, square footage, and the numbers of bedrooms and bathrooms.
After personally visiting the property and assessing its details, analyzing the comps and marketplace, and executing a series of formulas and calculations, the appraiser generally produces a detailed report to the interested parties. It includes full descriptions of the house’s traits and conditions, assessments of the surrounding area (possibly including demographics), comp analysis, market trends, relevant maps and photographs, and an explanation of the appraiser’s methodology. The appraiser’s educated estimate of the home’s market value then sums up the report.
Although an appraiser’s opinion is hopefully based on their high professionalism, experience and independence, it remains just an opinion (though usually a really good one). If the seller or lender has any legitimate doubts about one appraiser’s findings, they can solicit the opinion of a second—if it’s something they can afford. But the difference between two real estate appraisers’ estimates generally isn’t much greater than 5%, unless one of them was incompetent.