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What is an
Appraisal? |
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An appraisal is a professional
appraiser's opinion of value. The preparation of an appraisal
involves research into appropriate market areas; the assembly
and analysis of information pertinent to a property; and the
knowledge, experience, and professional judgment of the
appraiser. Appraisals may be required for any type of
property, including single-family homes, apartment buildings
and condominiums, office buildings, shopping centers,
industrial sites, and farms. The reasons for performing a real
property appraisal are just as varied. They are usually
required whenever real property is sold, mortgaged, taxed,
insured, or developed. Examples of common reasons for needing
an appraisal include mortgage lending purposes, tax
assessments and appeals of assessments, negotiation between
buyers and sellers, government acquisition of private property
for public use, business mergers or dissolutions, and lease
negotiations.
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What
is the Role of the Appraiser? |
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The role
of the appraiser is to provide objective, impartial, and
unbiased opinions about the value of real property—providing
assistance to those who own, manage, sell, invest in, and/or
lend money on the security of real estate. Appraisers assemble
a series of facts, statistics, and other information regarding
specific properties, analyze this data, and develop opinions
of value. Each appraisal assignment challenges the appraiser's
ability to put analytical skills into practice, exercise sound
judgment, and communicate effectively.
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| What
Qualifications Must Appraisers Have? |
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All states require appraisers to be state licensed or
certified in order to provide appraisals to federally
regulated lenders. Some states require appraisers to be
licensed or certified to provide appraisals for other parties
as well. To become licensed or certified, an appraiser must
pass an examination that is administered by their state's
appraisal board. The Appraiser Qualifications Board (AQB) of
The Appraisal Foundation is authorized by Congress to
establish the minimum requirements for Certified General Real
Property Appraiser and Certified Residential Real Property
Appraiser classifications, and the AQB provides recommended
minimum requirements for the Licensed Real Property Appraiser
and Trainee classifications.
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What
Process Does an Appraiser Use in Estimating a Property’s
Value? |
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appraisal process is an orderly and concise method of reaching
an estimate of value. The process has six major steps which
include: definition of the problem, preliminary survey and
appraisal plan, data collection and analysis, application of
the three approaches to value, reconciliations of value
indications, final estimate of defined value. This process
assists the appraiser in reaching a sound conclusion. The
major phase of this process involves the application of the
three approaches to value which include the Market Data
Approach, the Cost Approach and Income Approach. The three
approaches are reconciled and the value via most applicable
approach, in the opinion of the appraiser, is selected as the
final estimate of value. In most residential appraisals,
particularly those of single or two family dwellings, the
direct sales comparison or market approach best reflects the
actions of buyers and sellers and is the most convincing and
defendable approach to value.
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| How
is an Appraisal Different from the Different Types of Home
Inspections? |
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appraisal is very different from a home inspection. An
appraiser is not a whole house inspector, engineer, architect,
electrician, plumber, H.V.A.C. technician or contractor. The
appraiser briefly walks through the house to get an idea of
the general condition and room count. An appraisal is not a
guarantee of condition. The appraiser will ask about any
visible problems and those which may not be visible, and will
do his/her best to gauge any impact on value attributable to
those problems. You are encouraged to seek the advice of
experts if you have any questions about the structural or
mechanical aspects. In general, an appraiser forms an opinion
of value via the appraisal process and reports the results. A
home inspector determines the condition of the home and its
major components
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If I
Paid for an Appraisal Directly, Shouldn’t I Own the Appraisal
Report as Well? |
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The
appraisal is, in fact, legally owned by the client of the
appraiser. The client is defined as the person or entity that
engages the appraiser to perform the appraisal assignment.
For the purposes of a mortgage finance transaction, the client
is the lender. An appraiser is prohibited from revealing the
results of an appraisal to anyone but the client. However,
consumers may obtain a copy of the appraisal report from their
lender who had ordered the report under the Equal Credit
Opportunity Act.
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