Any residential real estate appraiser licensed to VA loans will tell you the profession is both a combination of art as well as a science. The science part comes from evaluating raw date while the art contribution is more of an opinion based upon experience. That means you can easily order an appraisal for the same property, without the benefit of a sales contract, from three different appraisers and get three different results. The values might come in close to one another, but rarely will they be exactly the same.
The appraiser uses the local multiple listing service to look at recent home sales in the area of similar properties as well as show a list of similar homes listed for sale yet not sold or under contract. In the instance of a condominium where the square footages and amenities are almost identical, the price variances will be minimal. Still, a 1,000 square foot condo on the first floor of a tower will be valued less than a condo on the 20th floor. And that’s where adjustments come into play.
An adjustment is an addition or subtraction to a home’s value based upon perceived benefits or detractions from the property’s worth. An upscale kitchen and a new master bath may occupy the very same square footage but the property with the nicer kitchen and bath will be appraised slightly higher compared to similar properties in the neighborhood without the upgrades.
Another adjustment might be for something a bit more nuanced but certainly a value-add is a nice view of the mountains, valley or city skyline. Appraisers do have a set of uniform adjustments they can refer to but sometimes it’s a judgment call. Sometimes the value of a home can be adjusted higher or lower based solely on the perceived value of the adjustment of the appraiser. It truly is art and science.