Mortgage lenders require appraisals of property in order to establish what the market value of a property is. Appraisals of properties are conducted by individuals who are certified to state opinions regarding value of property based on comparisons to similar or identical properties that have sold in a geographic area.
It is rare that a property that is identical to the property that is the subject of the appraisal has been sold in close proximity of time and location to the subject. Therefore appraisers calculate adjustments for size, condition, date of sale, land size, location, neighbourhood characteristics and detrimental factors when they establish market value.
An appraiser uses a standardized form to report his or her findings for residential property appraisals and narrative-style format to report the value of commercial properties.