Understanding Appraisals in Real Estate

What is a Home Appraisal?

A home appraisal is a professional, unbiased estimate of a property’s market value, typically conducted by a licensed or certified appraiser.

It’s not the same as a home inspection. An appraisal determines value, while an inspection assesses the condition.

Why is an Appraisal Necessary?

The primary reason for an appraisal is to protect the lender. Here's how:

  • When a buyer applies for a mortgage loan, the lender needs to ensure the property is worth at least as much as the loan amount.

  • The home serves as collateral. If the borrower defaults, the lender may repossess the home and sell it to recover the money.

  • An appraisal helps prevent the lender from over-lending on a property that isn't worth the price being paid.

Who Orders the Appraisal?

  • The lender typically orders the appraisal through a third-party appraisal management company (AMC) to ensure neutrality.

  • The buyer usually pays for the appraisal as part of the closing costs.

What Does an Appraiser Do?

An appraiser will:

  1. Visit the property to assess its size, condition, layout, features, and any recent upgrades.

  2. Review comparable home sales (“comps”) in the same area.

  3. Analyze local market trends.

  4. Provide a detailed appraisal report with the final estimated market value.

When Does the Appraisal Happen?

  • After the purchase agreement is signed but before the loan is finalized.

  • It’s a key step in the underwriting process for mortgage approval.

What Happens If the Appraisal is Low?

If the appraised value is lower than the purchase price, several things can happen:

  1. Renegotiate: The buyer may ask the seller to lower the price.

  2. Make up the difference: The buyer can pay the difference out of pocket.

  3. Dispute the appraisal: If errors are found in the report.

  4. Cancel the deal: Depending on contingencies in the contract.

At Bruce W. Reyle Real Estate Appraisers & Consultants, we deliver independent, expert valuations you can trust.

Whether you're buying, selling, refinancing, or investing, a professional appraisal ensures the price you're paying — or accepting — reflects true market value.
✔ Thorough on-site inspections
✔ Local market expertise
✔ Accurate, unbiased reports
✔ Residential & investment property appraisals
From verifying square footage to analyzing comparable sales and income potential, we provide the clarity and confidence you need for smarter real estate decisions.

Understanding the Role of the Appraiser

Who Makes Sure a Home’s Price Matches Its Value?

That’s where the appraiser comes in.

At Bruce W. Reyle Real Estate Appraisers & Consultants, we provide an independent, professional opinion of a property's fair market value what a well-informed buyer would likely pay, and what a well-informed seller might reasonably expect to receive.

Our certified and licensed appraisers work to ensure everyone involved in the transaction — especially you — has the clearest possible understanding of the property’s true worth.

Step 1: Property Inspection – The Foundation of the Appraisal

Every accurate appraisal starts with a comprehensive on-site inspection. Here’s what we look for:

  • Total number of bedrooms and bathrooms

  • Living space size and layout

  • Location, condition, and curb appeal

  • Any renovations, upgrades, or unique features

  • Potential defects or issues that could impact value

We also verify the physical characteristics of the home sometimes drawing a floorplan sketch to ensure the layout and square footage match what’s on record.

Step 2: Valuing the Property – Three Common Approaches

Depending on the type of property, we use one or more of the following methods to determine value:

1. Sales Comparison Approach (Most Common)

We compare the home to similar properties ("comps") recently sold in the area. Then, we make dollar adjustments based on differences like:

  • Extra bedrooms or bathrooms

  • Renovated kitchens or added fireplaces

  • Lot size or quality of construction

Example:
If a comparable home has an extra bathroom, we subtract that value from its sale price to match the subject property. If the subject has the extra feature, we add value instead.

After adjusting several comparables, we reconcile the data to arrive at a well-supported estimate of the home’s market value. The is the most relied-upon method for appraising properties being sold. 

2. Cost Approach (Used Less Often)

We estimate what it would cost to build the property today using current local construction costs, labor, and materials minus any depreciation.

This sets a maximum value, since most buyers wouldn’t pay more for an existing home than for new construction of similar quality.

3. Income Approach (For Rental/Investment Properties)

For income-generating properties, we look at:

  • Current rental income

  • Operating expenses

  • Returns on similar properties

This helps us determine what an investor would pay based on expected income.

Step 3: Final Valuation – Reconciliation

After analyzing the property using the appropriate methods, we finalize an estimated market value in the appraisal report.