Insights Basics
What an appraisal is, and what it is not
An appraisal is not an assessment or a broker's opinion. Here is what you actually get, and why the effective date matters.
People use the word "appraisal" loosely. A tax assessment, a broker's price opinion and an online estimate all produce a number, but none of them is an appraisal. Knowing the difference helps you order the right report and read it correctly.
What an appraisal is
An appraisal is a written opinion of market value, prepared by a licensed appraiser as of a specific date. That date is called the effective date. The appraiser studies the property and the market around it: comparable sales, land sales, listings, leases, construction costs and other data. The result is an independent, objective analysis that explains how the value was reached.
The appraiser has no stake in the outcome. We are not paid more for a higher or lower number, and we do not represent the buyer, the seller, the lender or either side in a dispute. That independence is the reason attorneys, courts, lenders and the IRS accept appraisals when they would not accept an opinion from someone with an interest in the deal.
What an appraisal is not
It is not a tax assessment. Your county assessor values thousands of properties at once using mass appraisal models. An assessment is built for fairness across a whole county, not for precision on one property. That is why an individual appraisal can be useful when you believe your assessment is too high.
It is not a broker's opinion. A real estate agent's comparative market analysis is a helpful marketing tool, and good agents know their markets well. But it is prepared to win or price a listing, and it does not carry the same standards, disclosures or independence.
It is not an online estimate. Automated models cannot walk through the building, see the condition of the roof or understand that a farm has poor drainage on one quarter.
Why the effective date matters
Values change over time, so every appraisal answers the question "what was this property worth on this date?" The effective date depends on the purpose:
- For estate settlement, it is usually the date of death, which may be months or years in the past.
- For a divorce, it may be the date of separation or a date set by the court or the attorneys.
- For financing or a sale, it is normally the date of inspection.
A retrospective appraisal, with an effective date in the past, is common and entirely valid. The appraiser uses the sales and market data that were available on that date.
What you receive
You receive a written report that identifies the property, the intended use, the effective date and the approaches to value that were used. It shows the comparable data and explains the adjustments. A good report lets a reader who has never seen the property follow the reasoning and understand why the number is what it is.
If you are not sure which kind of report you need, tell us about the situation. Sometimes the honest answer is that you do not need an appraisal at all.