4 Things That Will Dictate The Price Of Your Appraisal
I often get asked what the price of an appraisal is. This is not a question that is easily answered without getting additional information. While there is a pretty standard fee for properties that are typical for an area there are various things that will dictate the price of your appraisal so we’ll look at these factors today.
Location
Location may affect the price of your appraisal if the property is in an area that has sparse sales activity. The typical example of this type of property is one that is located in a rural area. The amount of work and time necessary to complete the assignment increases because it is necessary to do more research to locate comparable sales.
Another reason that the price of an appraisal for this type of property can be higher is that the cost to the appraiser is more. Appraisers must take photos of the sales comparables and this can require driving longer distances to take the photos, which adds to the cost of the appraisal.
Size of the house (Gross Living Area)
The size of the house affects the price because a larger house takes longer to measure and is more time intensive during the property observation. I can look at a smaller house in approximately 30-45 minutes, however it has taken me 3-4 hours to completely inspect a large custom-built home.
In addition to the measurements taking longer walking through the house to note the quality and materials of construction can add to the time spent at the house. Many times these homes have additional improvements as well such as guest quarters and storage buildings to name a few.
Uniqueness of property
The word unique can describe many things, however what we are discussing here is how well your house fits into the neighborhood. If
most properties have 3 or 4 bedrooms with 2 or 3 bathrooms and yours only has 1 bedroom and 1 bath then this would classify it has unique. What if your home looks like a flying saucer? You may laugh, but these homes do exist.
Log homes are another example of a property that you may not consider unique but the sale of them is. From my experience owners of log homes do not usually sell them very frequently so there are not very many comparables available. This makes it necessary to expand typical search parameters and look for sales that are further away or that have occurred further back in time. The research that these types of properties take is typically longer and more in-depth.
Who the appraisal is done for
I know this sounds strange but stay with me here. The amount of work done on an appraisal can sometimes depend on who you are doing it for. For example, most banks that I do work for require the cost approach even though the house may be 40 or 50 years old. The cost approach is really only appropriate for new construction due to the difficulty with estimating depreciation, however completing the cost approach takes additional time and effort which costs more.
In addition to completing sections of the appraisal that may not be relevant there are some forms which banks require that also take time. For these reasons I typically charge more for an appraisal done for a bank or mortgage company, however when doing a pre-listing appraisal these items are not required, and I charge less for them.
The sales comparison approach is the most relevant approach for this type of appraisal because it more closely replicates the process that most buyers will go through in choosing their new home. Buyers typically look at what other similar homes have sold for and also what other homes are currently listed and available for them to buy, so focusing only on this approach is the best method.
Conclusion
The price of an appraisal will vary based on the above criteria. The best way to get an accurate price quote would be to call an appraiser and explain what you want to use the appraisal for and to whom it will be done for. In addition, providing property specific information like what is mentioned above will help the appraiser understand more about the property and allow them to give you a more accurate quote.
Question
Do you have any other questions about the things that will dictate the price of your appraisal? I’d like to get your take so let me know your thoughts. Thanks for reading.
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I agree Tom with everything. Did you appraise the flying saucer? lol 🙂 To add to the conversation, it bothers me when some clients want appraisers to put down a list of fees based on the form the appraisal is reported on. I refuse to do that. The form is only a package to put out product inside and it has little to do with how difficult it will be to put build our product.
No, thank goodness I did not have to appraise the flying saucer home!
Nice summary, Tom. I concur with this points. I’ll add the shape of a house can make a difference when it comes to measuring too. Very large and/or obtuse-angled homes can take a long time to measure to get it right. Consumers often call and ask, “how much is an appraisal?”, and then they question a bit when I say, “it depends.” But the truth is, it’s the same as a mechanic working on a car. An old VW bus might be a piece of cake, but a new Lamborghini might take much more work. Sometimes an old bus might take longer too depending on where the part is located. Okay, let’s not carry that analogy too far… 🙂
Great analogies Ryan and I completely agree. While many properties may fall in the “typical for the area” category there are others that will take more time and effort. I’ve had some of those hard to measure homes myself, one that actually looked like a stealth bomber.