KO Appraisal
Guide

What is a real estate appraisal?

A real estate appraisal is an independent, supported opinion of value for a specific property, as of a specific date, produced for a specific purpose. Each of those qualifiers is doing work. Remove any one and what remains is an estimate, not an appraisal.

What separates it from every other value estimate

Plenty of things will give you a number for a property: an automated model, an agent’s comparative market analysis, a tax assessment, a neighbour’s opinion. What distinguishes an appraisal is not that its number is better. It is that the number is accountable.

  • It is independent. The appraiser has no stake in the transaction and may not be compensated based on the value reached. That is a licensing requirement, not a courtesy.
  • It is supported. Every conclusion traces to identified evidence, verified comparable sales, income data, cost figures, that a reviewer can examine and disagree with.
  • It is performed by someone licensed and accountable. State licensing means there is a regulator, a complaint process, and consequences for incompetent or dishonest work.
  • It is tied to a defined standard of value and a defined date. "Market value" has a specific meaning that differs from investment value or liquidation value, and value moves, so a number without a date is not a value opinion.
  • It is written to a standard. USPAP governs how the work is performed and what must be disclosed, which is what makes independent review possible.

The parts of the assignment

Appraisal is often pictured as an inspection. The visit is real but small, most of the work happens afterward.

  • Defining the problem. Who will rely on this, for what, under which standard of value, as of what date? These answers determine everything downstream, which is why an appraiser asks about purpose before quoting.
  • Determining highest and best use. What is the legally permissible, physically possible, financially feasible, and maximally productive use? A property is valued according to that, not necessarily its current use.
  • Gathering and verifying data. Property characteristics, comparable transactions, income and expense figures, cost data. Verified rather than accepted at face value.
  • Applying the approaches to value. Sales comparison, income capitalisation, and cost, weighted according to which the market actually relies on for this property type.
  • Reconciling and reporting. Weighing the indications into a single supported conclusion, and setting out the reasoning so it can be followed.

Why the purpose changes the appraisal

The same property supports different valuations depending on the question asked, and this surprises people more than anything else about the process. A lender needs market value today. An estate needs fair market value as of a date of death that may be years past. A divorce needs value at a date set by the court. A condemnation matter needs just compensation, which in California can include damages to remaining property that a lender appraisal would never consider.

These are not different opinions about one number. They are answers to different questions. This is why an appraisal ordered for a refinance generally cannot be handed to the IRS, and why an appraiser asks what the report is for before beginning.

Common questions

What is the difference between an appraisal and an inspection?
An appraisal is an opinion of value; a home inspection is an assessment of condition and defects. The appraiser observes condition because it affects value, but does not test systems, enter crawl spaces, or produce a repair list. They answer different questions and neither substitutes for the other.
Who owns the appraisal report?
The client who engaged the appraiser. In a mortgage transaction, the lender, even though the borrower typically pays for it. Under federal rules a residential mortgage applicant is entitled to receive a copy of the appraisal. The appraiser cannot release the report to a third party without the client’s permission.
Can I get an appraisal for my own purposes?
Yes. Owners engage appraisers directly for estate planning, gift tax filings, divorce, tax appeal, litigation, and pre-listing decisions. When you engage the appraiser directly you are the client, and the report is prepared for your intended use.
How is an appraisal different from a Zestimate or other online estimate?
An automated valuation applies a statistical model to public records and listing data with no inspection and no verification. It cannot see condition, a poor floor plan, an unpermitted addition, or a view. It is a useful starting orientation and is not a supported opinion of value, which is why lenders, courts, and the IRS do not rely on one.
Is an appraisal a guarantee of what the property will sell for?
No. It is an opinion of what a property should sell for under the defined conditions, typically a willing buyer and seller, neither under duress, after reasonable market exposure. An actual sale involves negotiation, timing, and motivation that no appraisal predicts.
Who wrote this Kevin O'Brien, MAI, SRA. California Certified General Real Estate Appraiser #3005065, issued by the California Bureau of Real Estate Appraisers (BREA). Practicing in San Diego. This page reflects how these assignments are actually handled, not a summary of other people's summaries.
Where this applies Appraiser licensing is state-specific, there is no national appraisal licence, so appraisal engagements here are California properties, primarily San Diego County. The valuation methodology and the federal tax rules described above apply anywhere in the United States; if your property is in another state, you need an appraiser credentialed there, and this page should still tell you what to ask them for.

Related reading

Next step

Tell me about the property.

Most assignments start with a short call, property type, the purpose of the appraisal, and the deadline you are working against. You get a fixed quote before any engagement, never contingent on the value reached.

Typical commercial fees range $2,000–$4,000. Residential and simpler assignments quote lower. Every engagement is quoted in advance, so the figure is known before work begins.

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