An appraisal is an opinion of a defined value, for a defined property interest, as of a defined date, developed by an appraiser and supported by market evidence. Every one of those definitions matters. Change the date, the property rights, or the definition of value, and you can change the conclusion without anyone having done anything improper.

Who the appraisal is for

Every appraisal has a client and identified intended users, and it is developed for a stated intended use. This is more than paperwork. In a mortgage transaction the lender is the client even though the borrower usually pays for the report, and the report is developed for the lender’s lending decision. A borrower who wants an appraisal developed for their own purposes — a purchase decision, a tax appeal, an estate filing — is asking for a different assignment, and should engage an appraiser directly for it.

We confirm the client, the intended users, the intended use, the definition of value, and the effective date before we begin. Where an attorney or accountant is directing the matter, those elements usually come from them.

The property observation

We observe the property to establish what is actually there: room count, layout, condition, quality of construction, site characteristics, functional issues, and anything that a market participant would react to. We measure the improvements and sketch the floor plan. For single-family residential work under lender requirements, measurement follows the ANSI Z765-2021 standard, Square Footage — Method for Calculating.

This is an observation for valuation purposes. It is not a home inspection. We are not evaluating whether the furnace will last another winter or whether the wiring meets code, and an appraisal is not a substitute for hiring a home inspector.

The three approaches to value

Sales comparison. We research sales of properties that compete with the subject, then adjust each one for the differences that the market prices — location, size, condition, quality, age, site, and property-specific features. The adjustments are the analysis. An adjustment that cannot be supported from market evidence is not an adjustment, it is a guess with a dollar sign in front of it, and we explain in the report both the adjustments we made and how we derived them. This approach usually carries the most weight in residential work.

Cost. We estimate what it would cost to build a comparable improvement today, subtract accrued depreciation from all causes, and add the land value. It is most useful for new or nearly new construction, for special-purpose property, and for allocating between land and improvements. It carries less weight as a property ages and depreciation becomes harder to measure reliably.

Income. Where a property competes for buyers as an investment, we analyze the income it produces and the rates at which the market capitalizes that income. In residential work this applies where rental property is a meaningful part of the market; in commercial work it is often the approach that carries the analysis.

Reconciliation

We do not average the approaches. We weigh what each one tells us in light of the quality of the data behind it and the way buyers and sellers in that market actually behave, and we explain in the report why the conclusion falls where it does. That explanation is the part a reader can test, and it is what separates a supported opinion from a number.

What an appraisal is not

It is not a prediction of what the property will sell for. Sale prices are affected by the motivation of the parties, marketing exposure, negotiation, and occasionally a bidding war, and an appraisal is an opinion of value under a stated definition rather than a forecast of any particular transaction. It is not a guarantee, and no competent appraiser will offer you one. It is not a home inspection. And it is not advice about whether to buy, sell, or invest — that decision belongs to you and your advisors.

What it is, done properly, is a documented, independent analysis you and every other intended user can follow from the data to the conclusion.