Appraisals And Market Value

What is the difference between market value and appraised value?

An appraisal is "an estimate of a property's monetary value on the open market; an estimate of a property's type and condition, its utility for a given purpose or its highest and best use," according to Charles O. Stapleton III, Thomas Moran and Martha R. Williams, authors of "Real Estate Principles," 3rd Ed., Dearborn Financial Publishing, Chicago; 1994.

Comparative market analysis is an informal estimate of market value performed by a real estate agent or broker. It is based on like sales and generally offers a range of values including probable market value.

What's a house worth?

People traditionally turn to either an appraisal or a comparative market analysis when determining a property's value.

An appraisal is an expert's "estimate of a property's monetary value on the open market; an estimate of a property's type and condition, its utility for a given purpose or its highest and best use," according to Charles O. Stapleton III, Thomas Moran and Martha R. Williams, authors of "California Real Estate Principles," . The results can be presented to the client in various ways ranging from a brief summary on a preprinted form, to a more thorough narrative appraisal report showing all factual materials, techniques and appraisal methods used in setting forth the appraisers conclusion of value, or as a letter of opinion simply giving only the appraiser's conclusion of value, with no supporting data, Stapleton, Moran and Williams write.

Appraisers consider numerous factors such as square footage, construction quality, design, floor plan, amenities and energy efficiency. Other issues taken into account are neighborhood quality and a property's proximity to transportation, shopping and schools. Appraisers also look at lot size, topography, view and landscaping.

Comparative market analysis is an informal estimate of market value performed by a real estate agent or broker. Many agents offer a free analysis or property profile in hopes of acquiring a new client.

People also can do their own cost comparison using public records maintained by their county recorders' and assessors' offices. Private companies, using county records, have found a market selling home owners and potential buyers individually prepared reports comparing similar properties.