How Long Does a Home Appraisal Take?
A home appraisal is a process used to estimate the fair market value of a property. Conducted by an appraiser, it is a crucial component of home sale/purchase transactions that involve mortgages and applications for mortgage refinancing.
Home appraisals are usually a source of uncertainty and apprehension among buyers, sellers and homeowners alike. Depending on the result, an appraisal can make or break a transaction. But how long does an appraisal take, and what does the process entail?
Duration of a home appraisal
The duration of a home appraisal varies and is dependent on the home’s size, complexity and the method used by an appraiser to estimate the property’s value. From the time it is ordered by a mortgage company to the presentation of the appraisal report, a home appraisal can take as little as 2 days to as much as a week to be completed.
The home appraisal process
The home appraisal process involves three steps—the site inspection, identification and review of comparable sales and preparation of the appraisal report.
Site inspection
Before an appraiser can value a home, he or she must first determine its negative and positive characteristics through a site inspection. The site inspection is the physical assessment of the property. The assessment may last as little as 15 minutes to several hours or longer—characteristic of some one-of-a-kind properties.
The appraiser observes the home’s interior and exterior, records his or her observations of the various features and amenities, makes sketches and takes measurements and photos.
The home’s exterior is viewed in terms of its:
- Condition (evaluated as fair, average good or custom)
- Construction quality
- Property lot size
- Quality of landscaping
- Curb appeal
- Parking
The home’s interior is viewed in terms of the:
- Condition
- Number of bedrooms and bathrooms
- Flooring, windows, cabinetry and countertop finishing
- Square footage (the amount of liveable space is important)
- Functional heating, ventilation and air conditioning system
- Compliance with building codes
- Functional layout
The appraiser will also observe and pen information on factors such as:
- Location
- Surrounding neighbourhood (considering factors like the crime rate and access to amenities)
- Zoning classification
- Renovations and home improvements
Observations of negative influences, including a cemetery, dilapidated buildings, noise pollutants like a railway or an airport in proximity to the home, are recorded, as are observations of positive views such as a mountain, lake or park.
Comparables
The appraiser identifies and compares the home being valued to comparables or comps—recently sold homes with similar characteristics in the same market. Identifying comps can take anywhere from a few hours to a few days. Comps for unique properties are harder to find, and an appraiser may have to check outside the subject property’s market, further lengthening the appraisal process.
Three approaches used to estimate real estate value
Appraisers have three approaches at their disposal to estimate real estate value: the sales comparison approach, income capitalization approach and cost approach. Appraisers use one or a combination of the three approaches when conducting valuations.
Sales comparison approach: This approach compares the property being valued to recently sold properties that are of similar type in the same market. Values are added and deducted for similarities and differences, respectively. The sales comparison approach is the most popular method used to determine real estate value.
Income capitalization approach: This valuation approach uses the income a property generates to derive its value. The formula for calculating value is represented as the net operating income divided by the capitalization rate or rate of return. The approach is typically used to value income-generating properties.
Cost approach: In this approach, value is determined by estimating the cost to build a replica of the property in the current market, less depreciation. This approach is often used in the valuation of unique or luxury properties.
The appraisal report
The appraisal report represents the completion of the appraisal process. The appraised value, information on the condition of the home, amenities and features, photos and details of comparable properties used, method(s) used to appraise the value and market sales data are among the details included in the report.
Are you in need of appraisal services in Vancouver?
If you are in need of appraisal services in Vancouver, contact us at Adlaw Appraisals. Order online or have our qualified and experienced appraisers connect with you virtually to discuss your appraisal needs.