Appraisal Overview

This is a video summary of an appraisal report. You can see here, I’ve redacted the information. This was a real appraisal. The property address goes here. The borrower’s name goes here. And the meat of the appraisal, there’s a lot of information in an appraisal and you’re welcome to read all of it. But really, the important parts are scrolling down to the bottom of the second page, usually where the value is. Of course, that’s what everybody wants to know. Bottom left of the second page is the appraisal value.

00:34 We’re going back to the top. There’s lots of information to read. This one happened to actually be tenant occupied. It was an investment property, refinanced. You can go through and read every line if you like. It talks about this being an urban market as opposed to suburban or rural. Built up over 75%. Lots of interesting information in an appraisal. Again the most important part would be the value. And on the page with the value are the comps. The first three comps are the most important and the most relied upon. Sometimes an appraisal will have four, five, or six comps. The first three are the ones to look for. The subject property goes here. That’s the property in question that we’re refinancing or doing a new loan on. The comp one, comp two, comp three, their addresses go here. Then you get into all of the adjustments they’ll make.

01:34 For example, looking at the condition of the property. C4, they use these codes to describe the condition of the property. C5 is not a very good condition. Therefore, they’ve added $30,000 of value to comp one as well as comp three to bring it up to par with the subject property. And that’s what you do on an appraisal, is you make positive and negative adjustments to the comps to try and bring it on par with the subject property. You’ll also notice that the comp one is a three-bedroom. The subject property is a two-bedroom. So they deducted $5,000 from comp one to bring it down to the subject property’s valuation. All kinds of adjustments for this one apparently has a car port and an enclosed porch. Apparently, this subject property has a fence where comp two does not. You have all of your adjustments here for each of the comps and then the net price after the adjustments of each of the comps and then the appraiser will make a determination on the final value. That’s really what you need to know on an appraisal.

03:00 Some other interesting things to look at. You might wanna look at the sale date for the comps. This particular appraisal was done in the Spring of 2015. The comp one settled date was October 2014. It contracted, October 2014. Comp two, settled in October 2014, went under contract at August of 2014. Sometimes it’s interesting to see the age of the comps that are being used. Square footage of the site of the lot size is interesting. Comparing the comps to the subject property. Square footage is also interesting. Square footage of the home, the above grade gross living area they call it, of the subject property and all the comps is interesting to look at. And it’s interesting to look at the adjustments, but as I say, the bottomline is everybody wants to know where to find what it appraised for and where are the comps, which is page two. Page one is more of an interesting summary with lots of interesting information. And that is a brief overview of an appraisal report. Thank you.