Home Appraisals: A PrimerGetting real estate can be the most important financial decision some of us could ever make. Whether it's a primary residence, an additional vacation home or one of many rentals, purchasing real property is a detailed financial transaction that requires multiple people working in concert to pull it all off.
In most cases, appraisals are done as part of a finance transaction such as a purchase or refinance of a home. These transactions are federally regulated transactions in which an appraisal is required. In these events, the definition of value is indicated to be what is known as the current market value. Current market value is reviewing current sales from the past 12 months. An appraiser reviews these sales and compares them to your home in order to develop an opinion of current market value. Though appraisers can perform 3 different types of valuations (sales, cost and income), it is the sales comparison approach that is requested.