What is an Appraisal?

Buying real estate is the one of the biggest transactions some people might ever encounter. It doesn't matter if it's a main residence, a second vacation property, or a rental fixer upper, the purchase of real property is a detailed financial transaction that requires more than one set of eyes to see it through.

Most homebuyers are familiar with all parties involved in the process, with the most known face in the transaction almost always being the real estate agent. But who is responsible for making sure the property is consistent with the purchase price? This is where the appraiser comes into the picture. We provide an unbiased opinion of what a buyer might expect to pay (or what a seller should expect to receive) for a piece of real estate. Both the buyer and seller are informed parties, never leaving anyone out of the loop. A professional Arizona Certified Appraiser from OnPoint will ensure that you are informed every step of the way.

Where do we begin?

To determine an accurate status of the property, it's our duty to first perform a thorough inspection. We must physically see features such as the number of bedrooms and bathrooms, the location, as well as the living areas. We do this to ensure they are actually there and are in the condition a reasonable buyer would expect them to be. To ensure the stated size of the property has not been misrepresented and illustrate the layout of the home, the inspection often includes creating a sketch of the floor plan. Most importantly, the appraiser identifies any obvious amenities (or defects) that would have an impact on the value of the house.

After the completion of the inspection, we consider a couple of approaches when determining a value opinion for a property: the cost approach to value, the sales comparison approach and the income approach.

Replacement Cost

This is where the appraiser uses information on local construction costs, the cost of labor, and other elements to determine how much it would cost to replace the property being appraised. This figure usually sets the upper limit on what a property would sell for. The cost approach is also the least used predictor of value. 

Sales Comparison

Appraisers become very familiar with the neighborhoods in which they work. We thoroughly understand the value of certain features to the homeowners of that area. The appraiser looks up recent sales in close proximity to the subject and finds properties which are 'comparable' to the real estate in question. Knowing what certain aspects of the house are worth, such as square footage, extra bathrooms, hardwood floors, fireplaces or view lots, helps us as we add or subtract from each comparable's sales price so that they are more accurately in line with the features of subject property.

  • In the case where the subject has something such as an extra half bath that a comparable doesn't have, the appraiser might add the value of that bath to the comparable property.

Valuation Using the Income Approach

In the case of income producing properties (lets use rental houses for example), we may use a third way of valuing real estate. In this scenario, the amount of income the property produces is factored in with income produced by neighboring properties to determine the current value.


Once information from all approaches are combined, the appraiser is then ready to document an opinion of market value for the property in question. While this amount is probably the most accurate indication of what a house is worth, it may not be the price at which the property closes as the closing price of a home can always be driven up or down. Regardless, the appraised value is typically used as a guideline for lenders who don't want to loan a buyer more money than they could recover if they had to sell the property again. One of our experienced appraisers will help you get the most accurate property value, so you can make informed real estate decisions.