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Understanding Home Appraisal Terms: An Interview with Kim DiGirolamo of Absolute Appraisals

By Kim DiGirolamo

Tell us a little bit about your experience, company history and the services you offer.

I have been a residential appraiser since 1996. I am Connecticut state certified as well as FHA approved. My company, Absolute Appraisals, was established in 2004. Prior to appraising I spent 17 years in the banking industry, including branch manager, bank officer, and commercial and retail lender. As an appraiser I appraise one to four family residential properties for purchase, refinance, legal matters such as divorce settlements, estate planning, probate, establishing a home's listing price, and tax assessment appeal purposes.

What is the importance of getting a professional appraisal when buying or selling a home?

If you are planning to sell your home, it might be a wise decision to make a small investment in a professional appraisal. Unless you study real estate values on a day to day basis like a professional appraiser does, it's difficult to get a handle on real estate values. We aren't talking about how much you have invested in your home, how much you paid for it, or how much you want for it. We're talking about the true market value. One piece of advice that is consistently given by experts is do not overprice your home! It is very hard to be objective about your own home because of your emotional attachment to it. A professional appraiser is objective and will tell you what you need to know, not just what you want to hear. On the other hand, you do not want to overpay when buying a home. A professional appraisal will give you the information you need to be an informed buyer or seller in the current marketplace.

Can you briefly define what a real estate appraiser does and the role you play during the purchase and sale of a home?

An appraiser's job is to arrive at an unbiased estimate or opinion of value for a parcel of real estate that is independent, impartial and objective. In the purchase/sale of a home the appraiser needs to arrive at an estimate or opinion of value based on current market activity. An appraiser will help you get the most accurate property value, so you can make the most informed real estate decisions.

What are two or three common terms real estate appraisers use that home buyers and homeowners might not already know? Can you also explain what they mean?

Effective Age: The age of the property based on the amount of observed deterioration the property has sustained and/or updating the property has received. Effective age may be different from its chronological age based on years of neglect or recent rehabilitation. I have seen 100 year old homes which have been completely remodeled with effective ages or 5 or 6 years old. I have also seen 10 year old homes that have been completely neglected with effective ages or 25 or 35 years old.

Functional Obsolescence: Defects in a building or structure that detract from value or marketability, usually the result of layout, design or other features that are less desirable than features designed for the same functions in newer properties, i.e., 2-bedroom floor plans, larger homes with only one bathroom, having to pass through one bedroom to get to another bedroom.

External Obsolescence: Loss of value from forces outside the building or property, i.e., close proximity to highways, train tracks, high tension wires or location on a busy thoroughfare.

How does the cost approach compare with a sales comparison?

In the cost approach the appraiser uses information on local building costs, labor rates and other factors to determine the current cost to construct a reproduction or replacement cost new of the existing structure deducting depreciation and adding estimated land value. Due to the difficulty associated with estimating depreciation the cost approach can be somewhat unreliable.

In the sales comparison approach the appraiser arrives at an opinion of value by comparing the property being appraised to similar properties that have recently sold preferably within the subject neighborhood. Adjustments are made to the sales prices of the comparables for differences such as square footage, number of baths, number of bedrooms, view, acreage, condition, quality of the improvements, etc., in order to arrive at an estimate/opinion of current market value of the subject property.

What is a tip to help people understand the home appraisal terms in their appraisal report?

The client needs to read the appraisal report completely. There is a vast amount of information within an appraisal report. Sometimes people tend to skim the report and do not get the complete picture the appraiser is trying to portray. Located within the appraisal, the appraiser may include definition addendums to help the reader more fully understand the appraisal report. If the client still does not understand the appraisal terms or has questions about the report he or she should contact the lender who ordered the appraisal or if the appraisal was ordered by the client directly, contact the appraiser and ask any questions they may have.


To contact and/or find out more about this company, please visit their services directory profile.


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