What are the components of an appraisal?

Purchasing real property can be one of the most important financial decisions people make.  Whether it's a primary residence, investment property, an additional vacation property or one of many rentals, the purchase of real property is an involved financial transaction that requires multiple people working in concert to make it all happen.

To learn more about appraising, click here to see a short video or call us today to talk about your specific property.


The majority of the people involved are very familiar. The real estate agent is the most recognizable entity in the transaction. Next, the mortgage company provides the money necessary to bankroll the exchange. The title company sees to it that all aspects of the transaction are completed and that the title is clear to pass to the buyer from the seller.

So who makes sure the value of the real estate is in line with the amount being paid?   This is where the appraiser comes in.   We provide an unbiased estimate of what a buyer could expect to pay - or a seller receive - for a property, where both buyer and seller are informed parties. A professional California licensed appraiser from AVK Appraisal Services will ensure you are informed with a solid valuation.

Inspecting the subject property

To ascertain an accurate status of the property, it's our responsibility to first perform a thorough inspection. We must see aspects of the property hands on, such as the number of bedrooms and bathrooms, the location, and so on, to ensure they really are present and are in the shape a reasonable person would expect them to be. To ensure the stated size of the property has not been misrepresented and describe the layout of the property, the inspection often requires creating a sketch of the floor plan. Most importantly, we look for any obvious features - or defects - that would have an impact on the value of the property.

Next, after the inspection, an appraiser employs two or three approaches when determining the value of real property: a paired sales analysis, a replacement cost calculation, and an income approach when rental properties are prevalent.

Cost Approach

Here, we use information on local construction costs, labor rates and other elements to determine how much it would cost to construct a property similar to the one being appraised. This value often sets the maximum on what a property would sell for. It's also the least used method.

Sales Comparison

Appraisers become very familiar with the subdivisions in which they work. We thoroughly understand the value of particular features to the residents of that area. Then, the appraiser researches recent transactions in the neighborhood and finds properties which are 'comparable' to the home being appraised. Using knowledge of the value of certain items such as upgraded appliances, additional bathrooms, an additional living area, quality of construction, lot size, we adjust the comparable properties so that they are more accurately in line with the features of subject property.

  • For example, if the comparable property has a guest house, pool or updates and the subject does not, the appraiser may subtract these values from the sales price of the comparable.
  • But, in the case where the subject has something such as an extra half bath or more living area, that a comparable doesn't have, the appraiser might add the value of that bath to the comparable property. We adjust or eaualize the comparables to see what range of values occurrs.  These comparables values provide an indication of the subject property.
  • Because properties are always more or less unique the logic and methods used require explanation, or narrative. A skilled appraiser provides the necessary support for the opinion of value.
When it comes to knowing the true value of features of homes in West Sacramento and Yolo, AVK Appraisal Services is second to none. This approach to value is usually awarded the most weight when an appraisal is for a home purchase.

Valuation Using the Income Approach

A third method of valuing approach to value is sometimes applied when a neighborhood has a measurable number of renter occupied properties. In this scenario, the amount of revenue the property produces is factored in with other rents in the area for comparable properties to determine the current value.

The Bottom Line

Combining information from all approaches, the appraiser is then ready to stipulate an estimated market value for the subject property. The estimate of value at the bottom of the appraisal report is not always what's being paid for the property even though it is likely the best indication of what a property could sell for in an open market. Depending on the specific situations of the buyer or seller, their level of urgency or a buyer's desire for that exact property, the closing price of a home can always be driven up or down. But the appraised value is typically employed as a guideline for lenders who don't want to loan a buyer more money than they could recover in case they had to sell the property again. Here's what it all boils down to: An appraiser from AVK Appraisal Services will help you discover the most fair and balanced property value, so you can make profitable real estate decisions.