Breaking Down the the Appraisal Process

Getting a house is the most serious transaction many people could ever encounter. Whether it's a primary residence, a seasonal vacation home or a rental fixer upper, the purchase of real property is a complex financial transaction that requires multiple people working in concert to see it through.

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


You're probably familiar with the parties taking part in the transaction. The most familiar face in the transaction is the real estate agent. Then, the bank provides the money needed to finance the exchange. Ensuring all details of the sale are completed and that a clear title passes to the buyer from the seller is the title company.

So who makes sure the value of the property is consistent with the purchase price?   This is where you meet the appraiser.   We provide an unbiased estimate of what a buyer might expect to pay - or a seller receive - for a property, where both buyer and seller are informed parties. A professional Wisconsin licensed appraiser from Lifestyle Tax & Appraisal LLC will ensure you as an interested party are informed.

The inspection is where an appraisal starts

To ascertain an accurate status of the property, it's our responsibility to first perform a thorough inspection. We must physically see features, such as the number of bedrooms and bathrooms, the location, living areas, etc., to ensure they indeed are present and are in the condition a reasonable buyer would expect them to be. The inspection often includes a sketch of the floor plan, ensuring the square footage is proper and illustrating the layout of the property. Most importantly, the appraiser identifies any obvious features - or defects - that would have an impact on the value of the house.

Following the inspection, an appraiser employs two or three approaches when determining the value of real property: sales comparison and, in the case of a rental property, an income approach.

Replacement Cost

Here, the appraiser gathers information on local building costs, the cost of labor and other elements to ascertain how much it would cost to replace the property being appraised. This value commonly 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 can tell you a lot about the communities in which they appraise. We thoroughly understand the value of particular features to the homeowners of that area. Then, the appraiser researches recent sales in close proximity to the subject and finds properties which are 'comparable' to the subject being appraised. By assigning a dollar value to certain items such as square footage, additional bathrooms, hardwood floors, fireplaces or view lots (just to name a few), we adjust the comparable properties so that they more accurately match the features of subject.

  • For example, if the comparable property has a storm shelter and the subject does not, the appraiser may deduct the value of a storm shelter from the sales price of the comparable home.
  • 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.
After all differences have been accounted for, the appraiser reconciles the adjusted sales prices of all the comps and then derives an opinion of what the subject could sell for. This approach to value is usually given the most consideration when an appraisal is for a home exchange.

Valuation Using the Income Approach

A third method of valuing real estate is sometimes employed when an area has a reasonable number of rental properties. In this scenario, the amount of revenue the property yields is factored in with other rents in the area for comparable properties to derive the current value.

The Bottom Line

Combining information from all applicable approaches, the appraiser is then ready to stipulate an estimated market value for the property in question. It is important to note that while the appraised value is probably the best indication of what a property would sell for in an open market, it probably will not be the final sales price. Depending on the individual 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. Regardless, the appraised value is often employed as a guideline for lenders who don't want to loan a buyer more money than the property would likely sell for in an open marketplace. It all comes down to this: An appraiser from Lifestyle Tax & Appraisal LLC will guarantee you get the most fair and balanced property value, so you can make the most informed real estate decisions.

Some nice tips to expedite your appraisal from Lifestyle Tax & Appraisal LLC

By law, you, as a borrower, are are entitled to receive a copy of the completed appraisal report from the lender. Just give us a call at 715-693-4400 if you have any questions about the appraisal process.

To make your appraisal process go as smoothly as possible we generally recommend to have these documents, if available, ready for the appraiser:

  • A plot plan or survey of the house and land (if readily available).

  • Records on the latest purchase of the property in the last three years.

  • Information on any written private easements, such as a shared driveway with a neighbor.

  • A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer.

  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.

  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.

  • Brag sheet that lists major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of insulation or roof repairs) and permit confirmation (if available).

  • A copy of the current listing agreement with broker's data sheet and purchase agreement if a sale is "pending".

  • Information on "Homeowners Associations" or condominium covenants and fees.

  • A list of "proposed" improvements when the property is being appraised "as complete".

When the appraiser has arrived, you do not need to escort them along on the entire site inspection, but it's helpful be available to answer questions about your property and be willing to point out any home improvements.

Here are a few other helpful recommendations:

  • Accessibility: Appraisers are very detailed in their inspections. Make sure that all areas of the home are accessible, especially the attic and crawl space.

  • Housekeeping: Appraisers see hundreds of homes a year and will look past most clutter, but they're human beings too! A good impact can translate into a better home value.

  • Maintenance: We often suggest repairing small things like leaky faucets, missing door handles and trim.

  • FHA and VA Inspection Items: In the case of your borrower applying for either an FHA or VA loan, we strongly recommend to ask your appraiser if there are additional things that should be done before they arrive. Some items they may recommend might be: having a banister on all stairways, scraping and repainting where there's paint peeling, fixing leaky or dripping faucets, fixing broken windows or other glass like doors.