I get this question a lot and one day it dawned on me that maybe I wasn’t answering this in the correct way. Usually when anyone asks this question I typically tell them that I measure the subject and take pictures of the property. Also I make notes of the condition, improvements, location and view of the property. In addition to that I compare the best available comparables to the subject property and make adjustments where necessary within the report. Pretty much sums it up but you can find this on the web. I was wondering one day if maybe some of these people were really wondering exactly what do I do. Like how does it work? I mean it seems really boring but maybe they would like to know. So at the risk of sounding extremely boring I thought I would spell it out. First of all, this is my story and I am not speaking for every appraiser. However I do know a lot of appraisers who do the same exact thing as I do.
When I’m slow I am signing myself up with appraisal management companies and appraisal portals. I find them by simply googIing. I sign the agreements and upload all the pertinent information such as license and insurance. When the orders come in via email or text, I call the borrower to set the appointment. I pull up the subject property from a public records database such as Realquest.com. This is a paid online service for public information. I verify the information over the phone with the contact and then begin to run comparables. I search for comparables using a multiple listing service which is another paid service that allows you to search sales and listings within a certain criteria.
Here's a list of the comparable search results.
It will also show those properties on a map which helps you determine if there are any external factors to any of the properties including the subject. Such as backing a freeway, fronting a traffic street, backing a canyon and so on.
Here is a birds eye view of the comparables.
The comparable search criteria depends on how much activity there is currently in that market. I may start with 15% difference in living area, going out .5 miles from the subject but if that does not provide enough sales then I expand my search. It’s all relative to that particular assignment. The search needs to be objective and therefore sales price is not a factor. The subject’s market value is what we are trying to figure out right? In the back of my mind I am thinking about any reviewer that may review my appraisal. If it was warranted to expand search because of low turnover then I know I should be ok. It is not ok to expand search and seek out comparables outside of a market when there are perfectly good ones available within the immediate area. That being said there are certain times when it is necessary to seek out comparables into other markets if it is justified. Let’s say the subject has been highly upgraded and in order to supply comparables similar in quality and condition it may be necessary to go into other areas.
After choosing the best available comparables, I go to the subject property, measure and take pictures, drive comparables, you get the idea. Go back to the office and input the data. Analyze and reconcile the information. In a nutshell, the main factors are location, location, location. I’m kidding it’s just so funny when people think they are clever by saying this. But in a nutshell the main factors are location, size, condition, and view. You could add age and quality in there but that kind of goes with condition. Anyways, thanks for your time and I hope this helps with any curiosity you have about the profession.
About the author
Mathew Just is a Certified Residential Appraiser and has been servicing the southern California area for over 13 years.